Regional Collaborative Electricity Consumption Management: an Urban Operations Research Model

Electricity generation can be a major source of pollution. In a compact region where pollutants can easily transfer from one city to another, a unilateral response—on the part of one city to improve its environmental conditions—is often ineffective. This paper develops an urban operations research model for collaborative management of a reduction in electricity consumption. This model internalizes the external costs of electricity consumption in a region; derives the optimal level of electricity consumption; and sets up a scheme to compensate for the externalities of electricity consumption. This analysis is the first urban operations research model for collaborative electricity consumption management, which internalizes the external costs of electricity consumption. This study is also the first attempt to derive the optimal level of electricity consumption within regional collaboration. This is the first time that a scheme to compensate for the externalities is proposed to ensure that agreed-upon optimality principle could be maintained throughout the entire duration of cooperation.