Manufacturers' power strategy confronting marine energy instability and consumers' environmental concern: Incentive and data-driven policy analysis

Baozhuang Niu, Xinhai Deng and Hongzhi Wang

Applied Energy, 2024, vol. 375, issue C, No S0306261924014521

Abstract: Marine energy, as a renewable and environment-friendly energy, has presented promising solutions amid consumers' green concerns. However, manufacturers have to take the risk of marine energy's supply instability and green competition with market competitors. This study therefore investigates two competing manufacturers' equilibrium power strategies when they decide whether to use marine energy. We define the manufacturer's use of electricity from a fossil fuel power supplier as strategy T, and from a marine energy power supplier as strategy M. Our findings indicate that four strategy combinations may sustain as the equilibriums: TT, MT, TM and MM, depending on the sophisticated interactions of consumers' environmental concerns, marine energy stability and competition intensity. We identify the marine energy advantage and the demand shrinking effect to interpret the main findings. The marine energy advantage refers to the increased demand from eco-friendly consumers when using marine energy. The demand shrinking effect refers to the narrowing of demand due to increasing product homogeneity. We further find that the different competition landscapes drive power suppliers to adjust their power prices and thus affect the equilibriums, which is defined as the power price effect. Interestingly, we show that consumers' green concern may lead to a worse environmental performance because green demand is created but marine energy supply instability will induce the manufacturer with a larger demand size to opt for polluting and stable fossil energy power.

Keywords: Energy system modeling; Sustainable operations; Marine energy; Energy supply chain; Power stability; Game theory (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1016/j.apenergy.2024.124069

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