A Study on Equipment Renewal Strategy of Manufacturing Enterprises Based on the Hotelling Model

Authors

  • Hongming Qi, Sijia Liang, Binhe Sun, Member, IAENG LiaoNing Technical University, Huludao 125000, China Author

Abstract

Insufficient equipment renewal has become a key constraint on the high-quality transformation of China’s manufacturing industry. To address this challenge, an evolutionary game model based on the Hotelling spatial competition framework is constructed to investigate the strategic decisions of manufacturing firms regarding equipment renewal. The model identifies the mechanisms through which variations in government subsidy intensity influence firms’ equipment renewal strategies under different levels of market competition. The analysis reveals that government subsidies significantly incentivize equipment renewal investment, but this effect only emerges when subsidy intensity exceeds a specific threshold. Moreover, intensified market competition weakens the incentive effect of subsidies, particularly for firms with severe financing constraints. Although synergistic effects can enhance firms' willingness to renew equipment by reducing costs, their marginal benefits diminish in highly competitive environments. These findings provide theoretical insights for refining subsidy policies and developing differentiated policy strategies tailored to market competition intensity and firm-specific characteristics.

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Published

2025-09-01

How to Cite

A Study on Equipment Renewal Strategy of Manufacturing Enterprises Based on the Hotelling Model . (2025). IAENG International Journal of Applied Mathematics, 55(9), 2761-2775. https://ijesworld.com/index.php/IEANG/article/view/104