Journal of Industrial Engineering Research in Production Systems

Journal of Industrial Engineering Research in Production Systems

Investigating Effects of Energy-Efficiency Improvement of Two Substitutable Electricity Products on Customers’ Behavior Using Game-Theoretic Approach

Document Type : Research Paper

Author
Gamed Jafari
Assistant Professor, Industrial Engineering Group, Golpayegan College of Engineering, Isfahan University of Technology, Golpayegan, Iran
10.22084/ier.2024.5567
Abstract
Consider two substitutable electricity home-appliances that are produced by two competing manufacturers and are then sold to customers by two agencies. In the considered market, customers’ demands for these products are specified based on the selling prices as well as their energy-efficiency levels. To attract customers, one of the manufacturers aims to invest on the energy-efficiency improvement of his products. In this research, the pricing and energy-efficiency decisions are investigated on the mentioned problem. Moreover, the game theory is applied to set these decisions. In this setting, the problem is analyzed under Nash and Chain-to-chain games. In Nash game, the competition among the members is independently considered, while the products’ supply chains compete in Chain-to-chain game. Finally, the decisions are analyzed and some results and insights are provided. The results indicate that under some conditions, it is possible to attract more customers and obtain higher profits by investing on the energy-efficiency improvement. Due to the competition between both supply chains, the members’ profits in the cooperative mode ​​may be set lower than in the competitive mode. Also, policies that reduce the cost for the energy-efficiency improvement of an electricity appliance will be beneficial for its members.
Keywords
Substitutable Electricity Products
Energy-Efficiency
Pricing
Game Theory
Nash Equilibrium
Subjects
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Journal of Industrial Engineering Research in Production Systems
Volume 11, Issue 23
March 2024
Pages 93-103