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A game theoretic approach for pricing policies in a duopolistic supply chain considering energy productivity, industrial rebound effect, and government policies

Soroush Safarzadeh and Rasti-Barzoki, Morteza

Energy, 2019, vol. 167, issue C, 92-105

Abstract: Nowadays, due to environmental issues sustainability becomes more popular among industrial firms. In this regards, governments follow the energy-efficiency programs (EEPs) to control and reduce energy consumption in all the world. In this paper, we investigate a novel sustainable supply-chain consists of an energy-efficient manufacturer, inefficient manufacturer, and energy supplier that participation in an EEP. Also, we propose an extended utility function for household energy consumers, besides assuming industrial energy productivity as government's utility function and energy rebound of the technological efficiency improvement of the production process, for the first time. To design an effective program, a multi-stage game model is proposed under two scenarios, i.e. tax deduction and subsidy scheme. Then, we present equilibrium decisions as well as a sensitivity analysis in details. The results indicate that considering energy rebound can close profit calculations to the reality. Additionally, the tax deduction is a more effective policy than subsidy scheme to support the energy-efficient manufacturer in competition with similar manufacturers. However, subsidy policy provides better conditions for the government to control the energy consumption of the household sector using energy price reform. The present study clears the application of sustainable development participation in an industrial EEP.

Keywords: Industrial energy efficiency program; Energy productivity; Consumer behavior; Energy rebound; Government; Game theory (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:energy:v:167:y:2019:i:c:p:92-105