Promoting dynamic pricing implementation considering policy incentives and electricity retailers’ behaviors: An evolutionary game model based on prospect theory

Jun Dong, Yuzheng Jiang, Dongran Liu, Xihao Dou, Yao Liu and Shicheng Peng

Energy Policy, 2022, vol. 167, issue C

Abstract: As one method of demand-side management, dynamic pricing benefits society by promoting power supply and demand balance, renewable energy consumption, and market efficiency improvement. However, due to the novelty of dynamic pricing, it has not been well promoted among consumers in China. The regulators, electricity retailers and consumers all have a critical role to play in promoting dynamic pricing, and they have both common interests and mutual constraints. Coordinating the interests of the three parties will facilitate the promotion of dynamic pricing. This study establishes an evolutionary game model for these three parties from a bounded rationality perspective and investigates each party's dynamic evolution strategy. The findings indicate that the subsidy from the regulator, the cost of promoting dynamic pricing, the electricity price level, the consumer's responsiveness, and psychological factors all influence the promotion of dynamic pricing. The findings suggest policy recommendations for accelerating the development of dynamic pricing and a healthy electricity retail market.

Keywords: Dynamic pricing; Evolutionary game; Electricity retailers; Prospect theory (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:167:y:2022:i:c:s0301421522002841

DOI: 10.1016/j.enpol.2022.113059

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