Can Subsidies Accelerate the Platformization of Vehicle Logistics Industry? Evidence From China

The demand, technologies, and market all put forward the request for platformization of the vehicle logistics industry. In China, a few logistics companies have plans but only one has initially built a platform for vehicle logistics. This platform has also attracted a considerable number of service providers to join, which has led to competition between service providers and the platform. To promote the platformization of the vehicle logistics industry and attract more customers to use platform-based services, how to leverage the incentive effect of subsidies is a topic of concern for the government. Motivated by the above, this article discusses whether the exogenous subsidies (provided to customers for platform service or providers service) can accelerate the process of the vehicle logistics industry. We explore the role of subsidies by developing a model (a hotelling line) that describes the differentiated competition between the platform and service providers. Our study found that subsidies do not always work as expected. The effectiveness of the subsidy depends on service advantages and customer preferences. Subsidies may even be counterproductive if customers prefer service providers or if platform services lack advantages. This is a reminder for both the government and industry that to accelerate the platformization of the vehicle logistics industry, it is necessary to combine reality and not blindly subsidize.