Optimizing Financial Subsidy Types and Allocation on “Replacing Man with Machine”

Abstract

Abstract:

Fixed ratio and fixed volume subsidy, which are two financial subsidy types for “replacing man with machine”, are researched on. Fixed ratio subsidy refers to the government subsidy to the equipment supplier or buyer by a certain ratio of equipment price, while fixed volume subsidy means the government subsidy to the equipment supplier or buyer by a certain volume of money. Based on the game theory, optimal allocation and efficiency of government subsidy to “replace man with machine” are respectively researched under fixed ratio and fixed volume subsidy. First, sequential game models among government, equipment supplier and buyer are established under two subsidy types, and then the optimum subsidy allocations are derived. Then subsidy effectiveness and efficiency under optimum subsidy allocations are analyzed and compared. Last, financial subsidy proposals are given according to characteristics of the two subsidy types. Two main results are found. Firstly, allocating total subsidy to the equipment buyer is optimal under fixed ratio subsidy while under fixed volume subsidy, subsidy effectiveness is constant in all allocation schemes. Secondly, the capital usage efficiency of fixed volume subsidy is higher than that of fixed ratio subsidy.

Key words: supply chain, replacing man with machine , subsidy types and allocation decisions, governmententerprise game, capital usage efficiency

SUN Yuwei1，2,ZHANG Zhicong2. Optimizing Financial Subsidy Types and Allocation on “Replacing Man with Machine”[J]. Industrial Engineering Journal .

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