Research On Capacity Reserve Model For Emergency Supplies And Government Targeting Subsidy Policy

The outbreak and spread of the COVID-19 has brought severe challenges and huge impacts to the political and economic and social development of countries around the world.The huge demand for emergency supplies puts forward higher requirements on existing emergency supplies guarantee system of China.Reserving capacity is an effective way and development direction for the national reserve system to deal with major epidemics.In the process of government and manufacturer joint reserving capacity,the manufacturer decides to reserve capacity or not and the quantity of capacity.The government decides to provide subsidy polices to manufacturers or not and the type of subsidy polices.To address these questions,this paper develops the capacity decision models and cases analysis.It shows how the government induces the manufacturer to reserve capacity to reach a certain service level through optimal subsidy policies.The research of this paper mainly includes three parts.Firstly,the emergency supplies capacity expansion decision model and the government’s targeting subsidy policy.In this part,this paper develops a dynamic game model of government’s subsidies and the manufacturer expands emergency supplies capacity for reserve and analysis the equilibrium between them.This paper identifies the thresholds for four types of the subsidy polices,including fixed subsidy,marginal subsidy,hybrid subsidy,and no subsidy.And it puts forward the government induces the manufacturer to expand capacity to reach a certain service level through a theoretical framework of targeting subsidy policy.Secondly,the emergency supplies flexible capacity decision model and the government’s targeting subsidy policy.In this part,this paper puts forward a dynamic game model of government’s subsidies and the manufacturer sets up flexible production line to reserve emergency supplies capacity and analysis the equilibrium between them.This paper draws the thresholds for four types of the subsidy polices,including fixed subsidy,marginal subsidy,hybrid subsidy and no subsidy.And it puts forward the government induces the manufacturer to reserve flexible capacity to reach a certain service level through a theoretical framework of targeting subsidy policy.Thirdly,policies and development suggestions.In this part,based on the research conclusions of emergency supplies capacity expansion and emergency supplies flexible capacity,this paper considers the classification and matching rules of policies and subsidy objects.This paper analyses the examples of policies issued by government to ensure the supply of emergency supplies in the wake of the COVID-19 outbreak,and proposed development suggestions from the perspectives of effectiveness and efficiency.Through theoretical analysis and cases study,this paper draws the conclusions as follows.Firstly,in view of the problem of the emergency supplies capacity expansion,the government should divide manufacturers into two dimensions based on marginal cost and fixed cost.The study found that fixed(marginal)subsidy is a dominant subsidy policy if the manufacturer’s fixed(marginal)cost is high,while hybrid subsidy policy is dominant if both the manufacturer’s fixed and marginal costs are high.Secondly,in view of the problem of the emergency supplies flexible capacity,the government should divide manufacturers into two dimensions based on marginal cost and fixed cost.The study found that fixed(marginal)subsidy is a dominant subsidy policy if the manufacturer’s fixed(marginal)cost is high,while hybrid subsidy policy is dominant if both the manufacturer’s fixed and marginal costs are high.Thirdly,the study also found that the marginal subsidy can ensure the policy effectiveness,while the fixed subsidy helping improve policy efficiency.Based on results derived,this paper proposes a theoretical framework that allows government to implement a targeting subsidy policy such that subsidy policy matches with manufacturers who produce different kinds of emergency products.On the one hand,the research can support manufacturers to determine their capacity reserve strategies.On the other hand,it can provide management insights and implications for the government to implement targeting subsidy policy for emergency supplies,which has important theoretical significance and practical value for promoting the construction of national emergency management system.