IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v167y2019icp92-105.html
   My bibliography  Save this article

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

Author

Listed:
  • Safarzadeh, Soroush
  • Rasti-Barzoki, Morteza

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.

Suggested Citation

  • Safarzadeh, Soroush & Rasti-Barzoki, Morteza, 2019. "A game theoretic approach for pricing policies in a duopolistic supply chain considering energy productivity, industrial rebound effect, and government policies," Energy, Elsevier, vol. 167(C), pages 92-105.
    • Handle: RePEc:eee:energy:v:167:y:2019:i:c:p:92-105
    DOI: 10.1016/j.energy.2018.10.190
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S036054421832187X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2018.10.190?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Li, Ke & Zhang, Ning & Liu, Yanchu, 2016. "The energy rebound effects across China’s industrial sectors: An output distance function approach," Applied Energy, Elsevier, vol. 184(C), pages 1165-1175.
    2. Zhang, Linghong & Wang, Jingguo & You, Jianxin, 2015. "Consumer environmental awareness and channel coordination with two substitutable products," European Journal of Operational Research, Elsevier, vol. 241(1), pages 63-73.
    3. Galvin, Ray, 2016. "Rebound effects from speed and acceleration in electric and internal combustion engine cars: An empirical and conceptual investigation," Applied Energy, Elsevier, vol. 172(C), pages 207-216.
    4. Wang, Qunwei & Zhang, Cheng & Cai, Wanhuan, 2017. "Factor substitution and energy productivity fluctuation in China: A parametric decomposition analysis," Energy Policy, Elsevier, vol. 109(C), pages 181-190.
    5. Lin, Boqiang & Jiang, Zhujun, 2011. "Estimates of energy subsidies in China and impact of energy subsidy reform," Energy Economics, Elsevier, vol. 33(2), pages 273-283, March.
    6. Sorrell, Steve & Dimitropoulos, John, 2008. "The rebound effect: Microeconomic definitions, limitations and extensions," Ecological Economics, Elsevier, vol. 65(3), pages 636-649, April.
    7. Mizobuchi, Kenichi & Takeuchi, Kenji, 2016. "Replacement or additional purchase: The impact of energy-efficient appliances on household electricity saving under public pressures," Energy Policy, Elsevier, vol. 93(C), pages 137-148.
    8. Vishal V. Agrawal & Ioannis Bellos, 2017. "The Potential of Servicizing as a Green Business Model," Management Science, INFORMS, vol. 63(5), pages 1545-1562, May.
    9. Wuhua Chen & Zhe George Zhang & Zhongsheng Hua, 2016. "Analysis of price competition in two-tier service systems," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(6), pages 897-910, June.
    10. Mahlia, T.M.I. & Saidur, R., 2010. "A review on test procedure, energy efficiency standards and energy labels for room air conditioners and refrigerator-freezers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 1888-1900, September.
    11. Ward, David O. & Clark, Christopher D. & Jensen, Kimberly L. & Yen, Steven T. & Russell, Clifford S., 2011. "Factors influencing willingness-to-pay for the ENERGY STAR® label," Energy Policy, Elsevier, vol. 39(3), pages 1450-1458, March.
    12. Tao, Jing & Yu, Suiran, 2011. "Implementation of energy efficiency standards of household refrigerator/freezer in China: Potential environmental and economic impacts," Applied Energy, Elsevier, vol. 88(5), pages 1890-1905, May.
    13. Vieira, Nathália Duarte Braz & Nogueira, Luiz Augusto Horta & Haddad, Jamil, 2018. "An assessment of CO2 emissions avoided by energy-efficiency programs: A general methodology and a case study in Brazil," Energy, Elsevier, vol. 142(C), pages 702-715.
    14. Lu, Yingying & Liu, Yu & Zhou, Meifang, 2017. "Rebound effect of improved energy efficiency for different energy types: A general equilibrium analysis for China," Energy Economics, Elsevier, vol. 62(C), pages 248-256.
    15. Yu-zhuo, Zhang & Xin-gang, Zhao & Ling-zhi, Ren & Ji, Liang & Ping-kuo, Liu, 2017. "The development of China's biomass power industry under feed-in tariff and renewable portfolio standard: A system dynamics analysis," Energy, Elsevier, vol. 139(C), pages 947-961.
    16. Amjadi, Golnaz & Lundgren, Tommy & Persson, Lars, 2018. "The Rebound Effect in Swedish Heavy Industry," Energy Economics, Elsevier, vol. 71(C), pages 140-148.
    17. Ouyang, Jianjun & Ju, Peng, 2017. "The choice of energy saving modes for an energy-intensive manufacturer under non-coordination and coordination scenarios," Energy, Elsevier, vol. 126(C), pages 733-745.
    18. Sheu, Jiuh-Biing & Chen, Yenming J., 2012. "Impact of government financial intervention on competition among green supply chains," International Journal of Production Economics, Elsevier, vol. 138(1), pages 201-213.
    19. Moshiri, Saeed & Aliyev, Kamil, 2017. "Rebound effect of efficiency improvement in passenger cars on gasoline consumption in Canada," Ecological Economics, Elsevier, vol. 131(C), pages 330-341.
    20. Blumstein, Carl, 2010. "Program evaluation and incentives for administrators of energy-efficiency programs: Can evaluation solve the principal/agent problem?," Energy Policy, Elsevier, vol. 38(10), pages 6232-6239, October.
    21. Motalleb, Mahdi & Annaswamy, Anuradha & Ghorbani, Reza, 2018. "A real-time demand response market through a repeated incomplete-information game," Energy, Elsevier, vol. 143(C), pages 424-438.
    22. Liao, Hua & Cao, Huai-Shu, 2018. "The pattern of electricity use in residential sector: The experiences from 133 economies," Energy, Elsevier, vol. 145(C), pages 515-525.
    23. Zhao, Rui & Zhou, Xiao & Han, Jiaojie & Liu, Chengliang, 2016. "For the sustainable performance of the carbon reduction labeling policies under an evolutionary game simulation," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 262-274.
    24. Bye, Brita & Fæhn, Taran & Rosnes, Orvika, 2018. "Residential energy efficiency policies: Costs, emissions and rebound effects," Energy, Elsevier, vol. 143(C), pages 191-201.
    25. Srinivasan, Dipti & Rajgarhia, Sanjana & Radhakrishnan, Bharat Menon & Sharma, Anurag & Khincha, H.P., 2017. "Game-Theory based dynamic pricing strategies for demand side management in smart grids," Energy, Elsevier, vol. 126(C), pages 132-143.
    26. Matsuda, Kazuo & Hirochi, Yoshiichi & Kurosaki, Daisuke & Kado, Yosuke, 2015. "Area-wide energy saving program in a large industrial area," Energy, Elsevier, vol. 90(P1), pages 89-94.
    27. Li, Ke & Lin, Boqiang, 2018. "How to promote energy efficiency through technological progress in China?," Energy, Elsevier, vol. 143(C), pages 812-821.
    28. Peng, Xu & Tao, Xiaoma, 2018. "Cooperative game of electricity retailers in China's spot electricity market," Energy, Elsevier, vol. 145(C), pages 152-170.
    29. Safarzadeh, Soroush & Rasti-Barzoki, Morteza, 2019. "A game theoretic approach for assessing residential energy-efficiency program considering rebound, consumer behavior, and government policies," Applied Energy, Elsevier, vol. 233, pages 44-61.
    30. De Kleine, Robert D. & Keoleian, Gregory A. & Kelly, Jarod C., 2011. "Optimal replacement of residential air conditioning equipment to minimize energy, greenhouse gas emissions, and consumer cost in the US," Energy Policy, Elsevier, vol. 39(6), pages 3144-3153, June.
    31. Szargut, Jan & Stanek, Wojciech, 2008. "Influence of the pro-ecological tax on the market prices of fuels and electricity," Energy, Elsevier, vol. 33(2), pages 137-143.
    32. Vine, Edward, 2008. "Strategies and policies for improving energy efficiency programs: Closing the loop between evaluation and implementation," Energy Policy, Elsevier, vol. 36(10), pages 3872-3881, October.
    33. Unknown, 2016. "Energy for Sustainable Development," Conference Proceedings 253270, Guru Arjan Dev Institute of Development Studies (IDSAsr).
    34. José Jorge & Joana Rocha, 2015. "A Primer On Global Games Applied To Macroeconomics And Finance," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 869-886, December.
    35. Cheng, Zhonghua & Li, Lianshui & Liu, Jun, 2018. "Industrial structure, technical progress and carbon intensity in China's provinces," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2935-2946.
    36. Ouyang, Xiaoling & Gao, Beiying & Du, Kerui & Du, Gang, 2018. "Industrial sectors' energy rebound effect: An empirical study of Yangtze River Delta urban agglomeration," Energy, Elsevier, vol. 145(C), pages 408-416.
    37. Zhou, Meifang & Liu, Yu & Feng, Shenghao & Liu, Yang & Lu, Yingying, 2018. "Decomposition of rebound effect: An energy-specific, general equilibrium analysis in the context of China," Applied Energy, Elsevier, vol. 221(C), pages 280-298.
    38. Zhang, Yue-Jun & Peng, Hua-Rong, 2017. "Exploring the direct rebound effect of residential electricity consumption: An empirical study in China," Applied Energy, Elsevier, vol. 196(C), pages 132-141.
    39. Galarraga, Ibon & González-Eguino, Mikel & Markandya, Anil, 2011. "Willingness to pay and price elasticities of demand for energy-efficient appliances: Combining the hedonic approach and demand systems," Energy Economics, Elsevier, vol. 33(S1), pages 66-74.
    40. Zhou, Wenhui & Huang, Weixiang, 2016. "Contract designs for energy-saving product development in a monopoly," European Journal of Operational Research, Elsevier, vol. 250(3), pages 902-913.
    41. Liu, Zhen & Zhang, Xiliang & Lieu, Jenny, 2010. "Design of the incentive mechanism in electricity auction market based on the signaling game theory," Energy, Elsevier, vol. 35(4), pages 1813-1819.
    42. Guo, Fei & Pachauri, Shonali, 2017. "China's Green Lights Program: A review and assessment," Energy Policy, Elsevier, vol. 110(C), pages 31-39.
    43. Duc Luong, Nguyen, 2015. "A critical review on Energy Efficiency and Conservation policies and programs in Vietnam," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 623-634.
    44. Liu, Chang & Lin, Boqiang, 2018. "Analysis of the changes in the scale of natural gas subsidy in China and its decomposition factors," Energy Economics, Elsevier, vol. 70(C), pages 37-44.
    45. Hafezalkotob, Ashkan, 2017. "Competition, cooperation, and coopetition of green supply chains under regulations on energy saving levels," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 228-250.
    46. Belaïd, Fateh & Bakaloglou, Salomé & Roubaud, David, 2018. "Direct rebound effect of residential gas demand: Empirical evidence from France," Energy Policy, Elsevier, vol. 115(C), pages 23-31.
    47. Blumstein, Carl & Goldman, Charles & Barbose, Galen, 2005. "Who should administer energy-efficiency programs?," Energy Policy, Elsevier, vol. 33(8), pages 1053-1067, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Safarzadeh, Soroush & Rasti-Barzoki, Morteza & Hejazi, Seyed Reza & Piran, Md Jalil, 2020. "A game theoretic approach for the duopoly pricing of energy-efficient appliances regarding innovation protection and social welfare," Energy, Elsevier, vol. 200(C).
    2. Safarzadeh, Soroush & Rasti-Barzoki, Morteza & Hejazi, Seyed Reza, 2020. "A review of optimal energy policy instruments on industrial energy efficiency programs, rebound effects, and government policies," Energy Policy, Elsevier, vol. 139(C).
    3. Jin, Taeyoung & Kim, Jinsoo, 2019. "A new approach for assessing the macroeconomic growth energy rebound effect," Applied Energy, Elsevier, vol. 239(C), pages 192-200.
    4. Shao, Shuai & Guo, Longfei & Yu, Mingliang & Yang, Lili & Guan, Dabo, 2019. "Does the rebound effect matter in energy import-dependent mega-cities? Evidence from Shanghai (China)," Applied Energy, Elsevier, vol. 241(C), pages 212-228.
    5. Jafari, Mahboubeh & Stern, David I. & Bruns, Stephan B., 2022. "How large is the economy-wide rebound effect in middle income countries? Evidence from Iran," Ecological Economics, Elsevier, vol. 193(C).
    6. Safarzadeh, Soroush & Rasti-Barzoki, Morteza, 2019. "A game theoretic approach for assessing residential energy-efficiency program considering rebound, consumer behavior, and government policies," Applied Energy, Elsevier, vol. 233, pages 44-61.
    7. Jia, Zhijie & Lin, Boqiang, 2022. "Is the rebound effect useless? A case study on the technological progress of the power industry," Energy, Elsevier, vol. 248(C).
    8. Li, Guohao & Niu, Miaomiao & Xiao, Jin & Wu, Jiaqian & Li, Jinkai, 2023. "The rebound effect of decarbonization in China’s power sector under the carbon trading scheme," Energy Policy, Elsevier, vol. 177(C).
    9. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Münster Center for Economic Policy (MEP).
    10. Lin, Boqiang & Zhu, Penghu, 2021. "Measurement of the direct rebound effect of residential electricity consumption: An empirical study based on the China family panel studies," Applied Energy, Elsevier, vol. 301(C).
    11. Shi, Jian-hua & Han, Ying & Li, Xue-dong & Zhou, Jie-qi, 2022. "How does urbanization affect the direct rebound effect? Evidence from residential electricity consumption in China," Energy, Elsevier, vol. 239(PE).
    12. Yan Lu & Xu Yang & Yixiang Ma & Lean Yu, 2022. "Rebound Effect of China’s Electric Power Demand in the Context of Technological Innovation," Sustainability, MDPI, vol. 14(14), pages 1-18, July.
    13. Ouyang, Xiaoling & Yang, Yuchuan & Du, Kerui & Cheng, Zhenyu, 2022. "How does residential electricity consumption respond to electricity efficiency improvement? Evidence from 287 prefecture-level cities in China," Energy Policy, Elsevier, vol. 171(C).
    14. Wen, Fenghua & Ye, Zhengke & Yang, Huaidong & Li, Ke, 2018. "Exploring the rebound effect from the perspective of household: An analysis of China's provincial level," Energy Economics, Elsevier, vol. 75(C), pages 345-356.
    15. Lin, Boqiang & Zhu, Runqing, 2022. "How does market-oriented reform influence the rebound effect of China’s mining industry?," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 34-44.
    16. Yan, Zheming & Ouyang, Xiaoling & Du, Kerui, 2019. "Economy-wide estimates of energy rebound effect: Evidence from China's provinces," Energy Economics, Elsevier, vol. 83(C), pages 389-401.
    17. Jain, Manisha & Rao, Anand B. & Patwardhan, Anand, 2018. "Appliance labeling and consumer heterogeneity: A discrete choice experiment in India," Applied Energy, Elsevier, vol. 226(C), pages 213-224.
    18. Figge, Frank & Thorpe, Andrea Stevenson, 2019. "The symbiotic rebound effect in the circular economy," Ecological Economics, Elsevier, vol. 163(C), pages 61-69.
    19. Xu, Mengmeng & Lin, Boqiang & Wang, Siquan, 2021. "Towards energy conservation by improving energy efficiency? Evidence from China’s metallurgical industry," Energy, Elsevier, vol. 216(C).
    20. Rongxin Wu & Boqiang Lin, 2022. "Does Energy Efficiency Realize Energy Conservation in the Iron and Steel Industry? A Perspective of Energy Rebound Effect," IJERPH, MDPI, vol. 19(18), pages 1-20, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:167:y:2019:i:c:p:92-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.