A game-theoretic approach for examining government support strategies and licensing contracts in an electricity supply chain with technology spillover: A case study of Iran

Mohammad-Bagher Jamali and Morteza Rasti-Barzoki

Energy, 2022, vol. 242, issue C

Abstract: Technology spillover is evident in the renewable energy sector due to the significant development of technology. However, the lack of proper laws and regulations is an obstacle for technology-leader renewable energy suppliers to promote technological innovation. Therefore, some suppliers are interested in free-riding behavior instead of investing in their technologies. Consequently, we investigate the role of government support strategies and licensing contracts in promoting technological innovations under market failure by applying a game-theoretic approach. We consider government supports under two strategies: fixed-in-tariff (FIT) and grid's subsidy (GS); and cooperation between the rival renewable energy suppliers under two licensing contracts: royalty licensing (RL) and joint venture (JV). The two competitor renewable energy suppliers, the grid company, and the government are considered as players. One of these suppliers is a technology leader, and the other is a technology follower. The decision variables are the wholesale electricity price, level of electricity reliability, the quantity of electricity, and the subsidy amount. Based on the results of the case study, the government strategies provide more development of technology than the cooperation strategy between the two suppliers. The lowest and the highest pricing of electricity occur in the GS and RL scenarios, respectively.

Keywords: Technology spillover; Renewable energy; Government subsidy; Licensing contracts; Game theory (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:242:y:2022:i:c:s0360544221031686

DOI: 10.1016/j.energy.2021.122919

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