A game theoretic approach for the duopoly pricing of energy-efficient appliances regarding innovation protection and social welfare

Abstract

Recent developments in energy consumption ‘management’ have heightened the need for energy efficiency considerations in energy-intensive supply chains, according to the sustainable development framework. Therefore, policy-makers need to find out how they can improve these conditions, considering the resource limitations and energy requirements. According to these issues, we address a novel pricing model for new energy-efficient products, conventional models, and relative energy consumption under a tax-subsidy system. The products and energy services are made in a product supply chain consisting of an energy supplier and two manufacturers in a duopoly. Furthermore, the protection costs of innovation process such as copyright are investigated for the first time in this problem. Then, a multi-stage game model is developed considering two scenarios, based on different game structures. Finally, we solve the problem and provide a comprehensive analysis of the optimal values of variables and players’ profit. The results show that the first scenario has more advantages than the leader-follower competition. However, the second scenario results in less energy consumption than the first one. The findings also suggest that energy policies applied on the producer side are more effective than the consumer-side energy policies to improve energy-saving.