Optimizing prices in trade-in strategies for vehicle manufacturers

As environmental awareness increases, people have been developing energy-efficient oil-fuelled vehicles, and new energy vehicles. At the same time, trade-in business becomes popular in the vehicle industry. A vehicle manufacturer can promote a trade-in strategy for a new oil-fuelled automobile, a trade-in strategy for a new energy vehicle, or both of them. In this paper, we identify threshold conditions of each of these strategies when the manufacturer is to maximize profits. We also determine the optimal prices and productions for each strategy.