A Real-Time Pricing Scheme with Advertisement Competition Based on Multi-Leader–Multi-Follower Game in Smart Community

Yeming Dai, Yao Qi (), Lu Li () and Hongwei Gao ()
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Yeming Dai: School of Business, Qingdao University, Qingdao, Shandong Province 266071, P. R. China
Yao Qi: School of Business, Qingdao University, Qingdao, Shandong Province 266071, P. R. China
Lu Li: School of Mathematics and Statistics, Qingdao University, Qingdao, Shandong, Province 266071, P. R. China
Hongwei Gao: School of Mathematics and Statistics, Qingdao University, Qingdao, Shandong, Province 266071, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2021, vol. 38, issue 05, 1-28

Abstract: In this paper, an advertising differential game model is proposed to describe the competition among different power retailers for attracting users in continuous time. After the equilibrium of advertising differential game is obtained, a multi-leader–multi-follower game model is developed to study the real-time pricing scheme in smart community. The power retailers calculate the optimal prices in response to the users’ power consumption and obtain the non-cooperation Nash equilibrium, and then the multi-leader–multi-follower game equilibrium is found. The numerical simulation is performed to discuss the influence of different factors on the payoff of power retailers and users and to verify the rationality of the proposed pricing scheme. The results show that both advertising efficiency and user scale have positive effects on the revenues of the power retailers. Besides, the rise of electricity price has negative effect on users’ utilities, meanwhile it makes the revenues of power retailers increase at first and then decrease. Moreover, power retailers will not transfer advertising costs to the users in the form of incremental electricity price.

Keywords: Advertising differential game; multi-leader–multi-follower game; real-time pricing; demand response (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S0217595921400236

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