‘Forced to Green’ or ‘Willingness to Green’? Behaviours under Uncertainty of Quota Evidence from China’s Adoption of New Energy Vehicles
By: Yang Liu
The Rhenish Friedrich Wilhelm University of Bonn
Regarding China’s studies, it can be categorized as classical studies, contemporary and interdisciplinary researches, but under the criticism of theoretical absence as an ‘area study’. This research relates to the social, environmental, political and economic policies, subconsciously, it is also affected by the philosophy and history for the decision made by the government and people, namely, in term of the macro-perspective, it covers the philosophy, history, social, politics, and the environment, economics, industry reform. More importantly, it integrates the macro with the micro-perspectives, digging into individuals’ decision under a micro-perspective, providing a comprehensive insight, where it not only has a big picture on the evolution process in the longitudinal historical spectrum, but also a micro-world on its own functional mechanism regarding the individuals’ decision making. Accordingly, it is an interdisciplinary research providing a micro insight of behaviours from the evidence of emerging industry of new energy vehicles. Based on the literature review of the adoption of new energy vehicles, it elaborates two perspectives for the further studies. Firstly, the data fusion provides the insight for the design of sampling and data collection, combining the stated and revealed preference. Secondly, it raises the question of disparity between the willingness to pay and actual payment academically. Meanwhile, it raises the research questions on the behavior under different quota mechanisms. Accordingly, the study is based on samples of two groups, experiment group with a license plate and controlled group without a license plate deployed respectively, to answer and test the hypothesis. Firstly, the function mechanisms of WTP and AP are different, and there is a phenomenon of the “trap of subjective willingness”. Importantly, there is a disparity between WTP-AP, the higher uncertainty of utilization and the more learning opportunity with a delayed cost, the higher disparity between the WTP/AP. Secondly, the adoption of NEVs is forced to green under the multi-exclusive quota, simultaneously, there are externalities and spillover caused by the multi-exclusive quota. The framework is divided into seven chapters, the first chapter is a framework introduction of China’s studies, target and data source. The second chapter is the introduction of triangle backgrounds, comprising the international, China’s perspectives, then experiment group of Shenzhen. The third chapter focuses on the literature review on the adoption of new energy vehicles, elaborating the further studies on the data enrichment for the sampling and data collection, and disparity between the willingness to pay and actual payment. The fourth chapter is contingent on two furthering studies in the third chapter elaborating the literatures and detailed hypotheses in this research. Specifically, the first part is the literature on the willingness to pay, the commitment cost for the disparity between willingness to pay and actual payment, the second part is the theory of individual transferable quota for the treatment effect. The fifth chapter is the introduction of sampling design and description analysis for the data collection. After that, the sixth chapter is the empirical studies and results according to the literature and sub-hypothesis in fourth chapter. Lastly, it has a conclusion in the seventh chapter. After the literature review and empirical study, there are five findings. Firstly, for the variation of WTP, it cannot draw the conclusion that the private good’s variation is smaller than a public good in the meta-analysis, but it supports that the coefficient variation in the experiment group is higher than the counterpart in the controlled group. Secondly, for the different mechanisms between WTP and AP, the higher green perception of the NEVs, the higher WTP, but this positive relationship for WTP is not applicable to the AP, which indicates there is a phenomenon of the “trap of subjective willingness”. However, it supports the hypothesis the higher certainty of the charging location, the higher WTP, this is applicable to both WTP and AP. Besides, it found that the income is a necessary but insufficient condition for the adoption of NEVs.
Thirdly, contingent on the theory framework of commitment cost for the disparity between WTP/AP, it extends the previous research scope, due to the product utilization is strongly connected with the product or service chosen in its study and laboratory experiment, when the focus of uncertainty moves from the monetary value to the utilization, it cannot reach the same conclusion that the higher uncertainty of utilization, the higher disparity between the WTP/AP, which is also demonstrated the importance and necessity of category of product raised in the first hypothesis, public or private good. Additionally, it extends the previous precondition of zero learning cost in the theory of commitment cost, an extension with a learning cost is embedded in behaviors, it finds that the more learning opportunity with a delayed cost, the higher disparity between the WTP/AP.
Fourthly, it finds that the adoption of NEVs is forced to green in the model of multi-exclusive-quotas with a constant TAC and absent of transferable market, the more times participating in the lottery of conventional vehicles, the higher possibility of purchasing NEVs. Additionally, in term of macro-perspective in multi-exclusive quotas, the higher cost and smaller probability of one sub-quota, the higher rate of adoption for another sub-quota. Namely, the adoption of NEVs, is positively associated with a higher bidding price and lower lottery winning rate. Fifthly, in term of externalities, it finds that there is a spillover effect under the multi-exclusive quotas, which counteract the initial target of reducing the volume of conventional vehicles and increasing the volume of NEVs. Besides, there is an externality of discards in the multi-exclusive quotas. The higher cost of the bidding, the higher rate of discards; The lower the lottery rate of winning a license plate, the lower rate of discarding.
Accordingly, to avoid the problem of theoretical absence for China’s studies as an area study, it conducts an interdisciplinary research to raise the hypothesis, and designs the controlled and experiment groups to collect the data and tests the specific hypothesis, prioritizing on the micro-insight, rather than the simple macro-perspective.
Keywords: China’s Studies, Willingness to Pay (WTP), Actual Payment (AP), Disparity, Commitment Cost, Multi-exclusive Quota, Lottery, Bidding, New Energy Vehicles (NEVs)