Abstract
Under the ever-increasing capital intensive environment that contemporary process industries face, oligopolies begin to form in mature markets where a small number of companies regulate and serve the customer base. Strategic and operational decisions are highly dependent on the firms’ customer portfolio and conventional modelling approaches neglect the rational behaviour of the decision makers, with regards to the problem of customer allocation, by assuming either static competition or a leader-follower structure. In this article, we address the fair customer allocation within oligopolies by employing the Nash bargaining approach. The overall problem is formulated as mixed integer program with linear constraints and a nonlinear objective function which is further linearised following a separable programming approach. Case studies from the industrial liquid market highlight the importance and benefits of the proposed game theoretic approach.
Highlights
1.1 MotivationCurrent socioeconomic trends such as market globalisation, interconnectedness of firms and the ever-increasing capital intensive environment begin to lead to a paradigm shift on the market structure of process industries
In this paper we study the problem of fair customer allocation in oligopolies for the case that new customers appear and provide market share growth opportunity for the firms from a decentralised game-theoretic viewpoint
air separation unit (ASU), levels liquefier and on the flow of pipeline, respecgaseous nitrogen through the pipelines of the plant are established by Eq (10); similar bounds for the flow of gaseous nitrogen in the liquefier, air in the ASU and output of liquid oxygen is are given by Eqs. (11)–(13)
Summary
Current socioeconomic trends such as market globalisation, interconnectedness of firms and the ever-increasing capital intensive environment begin to lead to a paradigm shift on the market structure of process industries. In this paper we study the problem of fair customer allocation in oligopolies for the case that new customers appear and provide market share growth opportunity for the firms from a decentralised game-theoretic viewpoint. The firms that comprise the oligopoly agree to allocate the new customers in a fair manner while at the same time they can re-assign existing ones so as to maximise their respective profits. The goal of this paper is: (i) to introduce a new approach for the problem of customer allocation in oligopolies and (ii) apply game-theoretic concepts to ensure the fair optimisation of the market under study. 4 two case studies are examined from the industrial liquids market and the key findings are discussed while conclusions and future research directions are outlined in Sect.
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