Using Prudence to Predict the International Electric Vehicle Market

A Study in Game Theory

Abstract

In this paper, I study the current international market revolving around electric vehicles (EVs), with an emphasis on the countries of the United States and China. I use a Nash Equilibrium model within a game theoretic framework to assess the outcomes of possible actions taken by these two leading countries. Specifically, I structure this scenario as a multistage game, in which I use a variable I have defined as Prudence to determine the Nash Equilibria of various tariff scenarios by varying the foresightedness levels of the countries towards global needs, rather than short-term economic squabbles. I then provide policy recommendations for a global entity such as the UN to carry out in order to secure international emissions targets best. The outcomes of the model show that there exists a wide range of values for prudence in which the actions of the US and China lead to problematic outcomes for the world. As a result, this paper demonstrates the importance of global action in order to prevent catastrophic outcomes in the realm of the global fight against climate change, specifically regarding Electric Vehicles.