A game theoretic approach for pricing petroleum and determining investors' production volume with the consideration of government and intermediate producers. (December 2020)

• Record Type: Journal Article
• Authors: Babaei, Maryam; Asgarian, Fariba; Jamali, Mohammad-Bagher; Rasti-Barzoki, Morteza; Jalil Piran, Md.
• Is Part Of: Sustainable energy technologies and assessments. Volume 42(2021)
• Publication Date: 2020-12
• Subjects: Private investors -- Gasoline production -- Game theory approach -- Stackelberg; Renewable energy sources -- Periodicals; Energy development -- Technological innovations -- Periodicals; Electric power production -- Periodicals; Energy storage -- Periodicals; 333.79
• DOI: 10.1016/j.seta.2020.100825
• Languages: English
• ISSNs: 2213-1388

Abstract

Highlights: The investors' market entry is discussed from a game theoretic point of view. Profitability of the new investment in energy production is proposed. The government can manage the subsidies as it satisfies his profit. The government can cope with the shortages of gasoline in the country. Effect of the proposed method on intermediate producer and customers is considered. Abstract: In this paper, the profitability of investment in refinery building is examined and the effects of the model on each agent are considered, using a multi-agent method. This model covers the knowledge gap in the literature by investigating a comprehensive situation that is currently a part of strategic energy plans in developing countries. Deploying refineries in Iran is desirable due to the high level of gasoline consumption in comparison with the internal production. Given the scale of the required investments and their high risks, private investors are unwilling to invest. The main objective of governments is to provide investors the needed information so that they can decide logically about investment based on it. Using a game theory approach, this paper reveals significant concerns from the investment point of view with implications for the future of the gasoline industry. The Stackelberg game theory with three phases is applied to conduct our analysis. The current paper demonstrates that by determining the amount of subsidies and intermediate producers' production, governments can reassure investors that their investments will be profitable. A sensitivity analysis and a numerical example are presented to validate the proposed method. Finally, managerial sights into the investment process are brought forward.