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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Yeming Dai & Yao Qi & Lu Li & Hongwei Gao, 2021. "A Real-Time Pricing Scheme with Advertisement Competition Based on Multi-Leader–Multi-Follower Game in Smart Community," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 38(05), pages 1-28, October.
    • Handle: RePEc:wsi:apjorx:v:38:y:2021:i:05:n:s0217595921400236
    DOI: 10.1142/S0217595921400236
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