Design decision making for market systems and environmental policy with vehicle design applications

The goal of design decision making is to create products to satisfy functional requirements and meet consumer preferences in order to succeed in the marketplace. Using only engineering objectives and constraints may be insufficient to fully describe product performance as market and social objectives are involved in design decisions. This dissertation attempts to address three broad questions at the interface of engineering design, market systems, and public policy in an effort to provide insight for designers, consumers, and policy-makers.;The first question, "How does market competition affect product design decisions?" is addressed in a game-theoretic framework. Methodology is proposed to account for competitor price reactions to a new product entrant, and the study results indicate that ignoring competitors' pricing reactions can cause profit overestimation and impede the market performance of a new product design. Furthermore, mathematical analysis shows that consumer preference heterogeneity as a critical factor coupling engineering design and strategic market planning under long-run design competition.;The second question, "What are the economic and environmental implications of plug-in hybrid electric vehicles (PHEVs)?" is addressed through vehicle performance simulation, driver behavior characterization, and life cycle assessment. The results indicate charging between distances matters---PHEVs with small battery packs and short electric travel distances can outperform ordinary hybrid vehicles and large PHEVs if drivers charge frequently. PHEV design and allocation for various social objectives, including minimum petroleum consumption, life cycle costs and greenhouse gas emissions, are analyzed using an optimization framework. The study suggests that alternative PHEV designs are needed for different social targets, carbon allowance policy may have marginal impact to PHEV design under current US grid mix, and the subsidy on battery capacity can be less effective than that on all-electric range because recently developed battery technology allows maximum energy use in the batteries.;The third question addressed is "How does public policy affect vehicle design in a competitive market?" A model integrating vehicle design, oligopolistic market competition, and Corporative Average Fuel Economy (CAFE) regulations is presented to analyze automakers' design decisions. A distinctive pattern is identified in firms' vehicle design responses to fuel economy standards at market equilibrium. The results imply that automakers may fail to improve their vehicle fuel economy when a high CAFE standard is imposed. Through a case study of powertrain design incorporating the estimates of recent automotive market data and fuel-efficiency technology options, it is shown that fuel economy design responses are more sensitive to gasoline prices than CAFE policy.