Best response dynamics in waste-to-energy plants’ price setting problem

Abstract

This paper deals with the task of waste energy recovery and effective price setting of waste-to-energy plants. Its main contribution is the invention of a new approach to pricing of waste disposal in a particular waste management network. This novel method, which is based on a problem of finding the Nash equilibrium, takes into account the amounts of waste production of cities, capacities of waste-to-energy plants and their locations. The best response dynamics algorithm enables the computation of Nash equilibrium for a game of waste-to-energy plants in a normal form with numerous players and multiple strategies in comparison with other standard algorithms. The algorithm is able to find the Nash equilibrium for a sufficiently big step size between possible gate fees. The results of this work are applicable in the forecasting of prices of waste-to-energy plants’ services for real waste management networks.