This study analyzes the role of consumer choice in determining a strategic innovation policy. We establish an international Bertrand duopoly and conduct a choice modelling technique. The theoretical finding shows that an increase in investment in hybrid technology innovation increases the demand for hybrid cars. However, the empirical results show that consumers do not appreciate all attributes, only the hybrid battery, CO2 emission level and the sound of hybrid engines. We suggest that the government focus on the significant attributes in order to force not only the domestic automobile firm to innovate but the vendors as well.
AntweilerW., & GulatiS. (2013). Market-based policies for green motoring in Canada. Canadian Public Policy, 39(Supplement 2), 81–94.
2.
BatemanI., CarsonR.T., DayB., HanemannM., HanleyN., & HettT., (2002). Economic valuation with stated preference techniques. Cheltenham, UK and Northampton, MA, USA: Edward Elgar.
3.
BuchananK., RussoR., & AndersonB. (2014). Feeding back about eco-feedback: How do consumers use and respond to energy monitors?Energy Policy, 73(1), 138–146.
4.
DoucetteR.T., & McCullochM.D. (2011). Modeling the CO2 emissions from battery electric vehicles given the power generation mixes of different countries. Energy Policy, 39(2), 803–811.
5.
EngelmannD., & NormannH.T. (2007). An experimental test of strategic trade policy. Journal of Economic Behavior and Organization, 64(1), 144–156.
6.
HanleyN., MouratoS., & WrightR.E. (2002). Choice modelling approaches: A superior alternative for environmental valuation?Journal of Economic Surveys, 15(3), 435–462.
7.
HensherD.A., RoseJ.M., & GreeneW.H. (2005). Applied choice analysis: A primer. Cambridge: Cambridge University Press.
8.
HidrueM.K., ParsonsG.R., KemptonW., & GardenerM.P. (2011). Willingness to pay electric vehicles and their attributes. Resource and Energy Economics, 33(3), 688–705.
9.
IshiiY. (2013). On the state advertising policy under quality information bias. Review of Development Economics, 17(3), 571–584.
10.
LeT., & VanC. Le. (2016). Trade liberalisation and optimal R&D policies in a model of exporting firms conducting process innovation. Documents de travail du Centre d’Economie de la Sorbonne. Paris: University Pantheon-Sorbonne.
11.
McFaddenD. (1973). Conditional logit analysis of qualitative choice behaviour. In ZarembkaP., (ed), Frontiers in Econometrics (pp. 105–142). New York, NY: Academic Press.
12.
MessagieM., BoureimaF.S., CoosemansT., MacharisC., & MierloJ.V. (2014). A range-based vehicle life cycle assessment incorporating variability in the environmental assessment of different vehicle technologies and fuels. Energies, 7(3), 1467–1482.
13.
MorganD.L. (1997). Focus groups as qualitative research. California: SAGE Publication Inc.
14.
OttavianoG., TabuchiT., & ThisseJ.-F. (2002). Agglomeration and trade revisited. International Economic Review, 43(2), 409–436.
15.
ParsonsG.R., & MasseyD.M. (2003). A random utility model of beach recreation. In HanleyN., DW. Shaw, & WrightR. E. (Eds), The New Economics of Outdoor Recreation (pp. 241–267). Cheltenham, UK: Edward Elgar.
16.
SahaS. (2010). Consumer preferences and product and process R&D. Rand Journal of Economics, 38(1), 250–268.
17.
SpencerB.J., & BranderJ.A. (1983). International R&D rivalry and industrial strategy. Review of Economic Studies, 50(4), 707–722.
18.
SwaitJ. (2007). Advanced choice models. In KanninenB.J. (Ed.), Valuing environmental amenities using stated choice studies: A common sense approach to theory and practice. The Netherlands: Springer.
19.
WadP., & GovindarajuC.V.G.R. (2011). Automotive industry in Malaysia: An assessment of its development. International Journal Automotive Technology and Management, 11(2), 152–171.
