Dual Competing Photovoltaic Supply Chains: A Social Welfare Maximization Perspective
Abstract
:1. Introduction
2. Literature Review
3. Dual Competing Photovoltaic Supply Chains and Modeling Assumptions
4. Dual Competing PV Supply Chain Equilibrium and Cooperation under the Social Welfare Maximization
4.1. Decentralized Modeling Scenario: Dual Competing PV Supply Chain Equilibrium under the Social Welfare Maximization
4.2. Centralized Modeling Scenario: Dual Competing PV Supply Chain Cooperation under the Social Welfare Maximization
4.3. Hybrid Modeling Scenario: Dual Competing PV Supply Chain Equilibrium and Cooperation under the Social Welfare Maximization
5. Comparison Analysis: No Subsidy
5.1. Decentralized Modeling Scenario: Dual Competing PV Supply Chain Equilibrium without the Government’s Subsidy
5.2. Centralized Modeling Scenario: Dual Competing PV Supply Chain Cooperation without the Government’s Subsidy
5.3. Hybrid Modeling Scenario: Dual Competing PV Supply Chain Equilibrium and Cooperation without the Government’s Subsidy
6. Numerical and Sensitivity Analysis
- (1)
- Among the three modeling scenarios, for both PV supply chain i and j, the wholesale price of a module for the centralized scenario is less than that of the hybrid scenario; and the wholesale price of a module for the hybrid scenario is less than that of the decentralized decision (see Table 2).
- (2)
- Among the three modeling scenarios, for the lower cost PV supply chain i, the retail price of its PV system under the centralized scenario is less than that under the decentralized scenario, and the retail price of a PV system under the decentralized scenario is less than that under the hybrid scenario; for the higher cost PV supply chain j, the retail price of a PV system under the centralized scenario is more than that under the decentralized scenario, and the retail price of a PV system under the decentralized scenario is more than that under the hybrid scenario (see Table 2).
- (3)
- Among the three modeling scenarios, for the lower cost PV supply chain i, the ordering quantity of a PV system under the centralized scenario is larger than that under the decentralized scenario, and the ordering quantity of a PV system under the decentralized scenario is larger than that under the hybrid scenario; for the higher cost PV supply chain j, the ordering quantity of a PV system under the centralized scenario is less than that under the decentralized scenario, and the ordering quantity of a PV system under the decentralized scenario is less than that under the hybrid scenario (see Table 2).
- (4)
- Among the three modeling scenarios, for both PV supply chain i and j, the equilibrium (or optimal) profits of the PV supply chains and their members under the centralized scenario are less than those under the hybrid scenario, and the equilibrium (or optimal) profits of the PV supply chains and their members under the hybrid scenario are less than those under the decentralized scenario (see Table 2).
- (5)
- Among the three modeling scenarios, the equilibrium social welfare under the centralized scenario is more than that under the hybrid scenario, and the equilibrium social welfare under the hybrid scenario is more than that under the decentralized scenario (see Table 2).
- (6)
- Among the three modeling scenarios, the customer’s surplus under the centralized scenario is more than that under the hybrid scenario, and the customer’s surplus under the hybrid scenario is more than that under the decentralized scenario (see Table 2).
- (7)
- Among the three modeling scenarios, the government’s subsidy under the centralized scenario is less than that under the hybrid scenario, and the government’s subsidy under the hybrid scenario is less than that under the decentralized scenario (see Table 2).
- (8)
- When the unit module cost and the unit assembly cost of PV supply chain i are fixed, when the unit module cost and the unit assembly cost of PV supply chain j increases by a dollar, the equilibrium (or optimal) profits of PV supply chain i and j and their members will decrease, the trend also holds for the equilibrium social welfare, the customer’s surplus and the government’s subsidy (see Table 2). Nevertheless, the decreases of these values are trivial, i.e., the impact on the profits due to a small increase of the unit costs is very limited. This shows that when the cost structures of PV supply chains are very close to each other, the pricing decisions of these supply chains in the market will also be very close.
- (9)
- (10)
- Between the subsidy and no subsidy, the dual PV supply chains have the largest incentive to seek subsidies and pursue the decentralized strategy to achieve their maximum returns; however, the government would need to pay the maximal subsidy budget. The best option for the government would be to encourage the dual PV supply chains to adopt a centralized strategy since this will not only maximize the social welfare but also, at the same time, minimize the public subsidy. If there is no public subsidy, the optimal strategy for the dual supply chains would be to pursue the centralized strategy to gain the most returns for the supply chain members and the supply chains comparing to the decentralized or the hybrid strategies. The centralized strategy also creates the maximal social welfare when there is no subsidy.
7. Managerial and Policy Implications
7.1. No Subsidy
7.2. Subsidy
8. Conclusions
Acknowledgments
Author Contributions
Conflicts of Interest
References
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Parameters | SCi | SCj | |
---|---|---|---|
ci | c-Pi module cost (USD/unit) | 194.30 | 195.30 |
c0i | Assembling (BoS) cost (USD/unit) | 291.45 | 292.45 |
a | Maximum potential market size for PV supply chain i | 5000 | 5000 |
b | Reaction extent of the demand w.r.t the change of the retail price | 3 | 3 |
d | Reaction degree of the demand w.r.t the change of the competitor’s retail price | 1 | 1 |
τ | Bargaining power | 0.4 | 0.4 |
ci | Sensitivity One | 194.30 | 19630 |
c0i | 291.45 | 293.45 | |
ci | Sensitivity Two | 194.30 | 197.30 |
c0i | 291.45 | 294.45 |
Analysis | Original | Sensitivity One | Sensitivity Two | ||||||
---|---|---|---|---|---|---|---|---|---|
Unit Cost | (ci = 194.3, c0i = 291.45; cj = 195.30, c0j = 292.45) | (ci = 194.3, c0i = 291.45; cj = 196.30, c0j = 293.45) | (ci = 194.3, c0i = 291.45; cj = 197.30, c0j = 294.45) | ||||||
Scenario | Decentralized | Centralized | Hybrid | Decentralized | Centralized | Hybrid | Decentralized | Centralized | Hybrid |
Solutions | |||||||||
4105.45 | 1342.17 | 1940.73 | 4103.41 | 1341.50 | 1939.60 | 4101.37 | 1340.83 | 1938.48 | |
2958.12 | 731.40 | 1823.00 | 2957.29 | 731.36 | 1822.71 | 2956.46 | 731.32 | 1822.42 | |
486.55 | 486.32 | 964.80 | 487.36 | 486.89 | 965.50 | 488.16 | 487.46 | 966.20 | |
4027.29 | 4028.21 | 2373.24 | 4026.08 | 4027.93 | 2372.82 | 4024.86 | 4027.64 | 2372.41 | |
2958.04 | 731.94 | 883.55 | 2957.13 | 732.44 | 883.97 | 2956.22 | 732.95 | 884.39 | |
486.95 | 487.18 | 267.65 | 488.14 | 488.61 | 269.32 | 489.34 | 490.04 | 271.00 | |
4025.71 | 4024.79 | 5161.86 | 4022.92 | 4021.07 | 5157.53 | 4020.14 | 4017.36 | 5153.19 | |
Supply Chain Profits and Social Welfare | |||||||||
5,406,349 | 3,245,302 | 1,877,427 | 5,403,094 | 3,244,842 | 1,876,766 | 5,399,841 | 3,244,381 | 1,876,105 | |
11,130,718 | 2,163,535 | 3,865,291 | 11,124,017 | 2,163,228 | 3,863,930 | 11,117,319 | 2,162,921 | 3,862,570 | |
16,537,066 | 5,408,837 | 5,742,718 | 16,527,111 | 5,408,070 | 5,740,696 | 16,517,159 | 5,407,302 | 5,738,675 | |
5,402,120 | 3,239,780 | 5,328,969 | 5,394,641 | 3,233,803 | 5,320,016 | 5,387,167 | 3,227,832 | 5,311,071 | |
11,122,012 | 2,159,853 | 3,552,646 | 11,106,614 | 2,155,869 | 3,546,677 | 11,091,227 | 2,151,888 | 3,540,714 | |
16,524,132 | 5,399,633 | 8,881,615 | 16,501,255 | 5,389,672 | 8,866,694 | 16,478,394 | 5,379,719 | 8,851,785 | |
8,106,353 | 8,106,354 | 7,584,010 | 8,098,306 | 8,098,311 | 7,574,446 | 8,090,266 | 8,090,277 | 7,564,892 | |
8,106,351 | 8,106,352 | 7,583,256 | 8,098,301 | 8,098,303 | 7,572,935 | 8,090,255 | 8,090,260 | 7,562,621 | |
33,061,197 | 10,808,468 | 14,623,578 | 33,028,361 | 10,797,734 | 14,605,878 | 32,995,542 | 10,787,004 | 14,588,189 |
Analysis | Original | Sensitivity One | Sensitivity Two | ||||||
---|---|---|---|---|---|---|---|---|---|
Unit Cost | (ci = 194.3, c0i = 291.45; cj = 195.30, c0j = 292.45) | (ci = 194.3, c0i = 291.45; cj = 196.30, c0j = 293.45) | (ci = 194.3, c0i = 291.45; cj = 197.30, c0j = 294.45) | ||||||
Scenario | Decentralized | Centralized | Hybrid | Decentralized | Centralized | Hybrid | Decentralized | Centralized | Hybrid |
Solutions | |||||||||
1104.05 | 516.65 | 1023.87 | 1104.14 | 516.72 | 1024.05 | 1104.23 | 516.79 | 1024.23 | |
1837.38 | 1291.62 | 1718.26 | 1837.51 | 1291.79 | 1718.52 | 1837.64 | 1291.96 | 1718.78 | |
1325.64 | 2417.61 | 1208.81 | 1325.77 | 2418.13 | 1209.06 | 1325.90 | 2418.64 | 1209.32 | |
1103.97 | 517.19 | 545.63 | 1103.98 | 517.8 | 546.25 | 1103.98 | 518.41 | 546.87 | |
1837.77 | 1292.48 | 1363.58 | 1838.30 | 1293.51 | 1364.63 | 1838.82 | 1294.54 | 1365.67 | |
1324.06 | 2414.19 | 2627.50 | 1322.62 | 2411.27 | 2624.64 | 1321.17 | 2408.36 | 2621.77 | |
Supply Chain Profits and Social Welfare | |||||||||
585,770 | 1,168,971.77 | 487,072 | 585,885 | 1,169,469.16 | 487,279 | 585,999 | 1,169,966.65 | 487,486 | |
1,205,998 | 779,314.51 | 1,002,794 | 1,206,233 | 779,646.11 | 1,003,221 | 1,206,469 | 779,977.77 | 1,003,648 | |
1,791,768 | 1,948,286.28 | 1,489,866 | 1,792,118 | 1,949,115.26 | 1,490,500 | 1,792,469 | 1,949,944.42 | 1,491,134 | |
584,379 | 1,165,658.53 | 1,380,756 | 583,104 | 1,162,845.98 | 1,377,743 | 581,829 | 1,160,036.83 | 1,374,732 | |
1,203,133 | 777,105.69 | 920,504 | 1,200,507 | 775,230.65 | 918,495 | 1,197,884 | 773,357.88 | 916,488 | |
1,787,512 | 1,942,764.22 | 2,301,260 | 1,783,611 | 1,938,076.63 | 2,296,238 | 1,779,714 | 1,933,394.71 | 2,291,220 | |
4,456,892 | 6,809,337.64 | 5,756,581 | 4,452,470 | 6,802,582.88 | 5,749,135 | 4,448,052 | 6,795,836.87 | 5,741,697 | |
877,612 | 2,918,287.14 | 1,965,455 | 876,741 | 2,915,390.98 | 1,962,397 | 875,870 | 2,912,497.74 | 1,959,342 |
Subsidy | Modeling Scenario | SCi | SCj | Total SC Order Quantity | Total SC Profits | Social Welfare | Total Subsidy | ||||
---|---|---|---|---|---|---|---|---|---|---|---|
Wi | Pi | Qi | Wj | Pj | Qj | ||||||
Subsidy | Centralized | 731.40 | 486.32 | 4028.21 | 731.94 | 487.18 | 4024.79 | 8053.00 | 10,808,470 | 8,106,354 | 10,808,468 |
Decentralized | 2958.12 | 486.55 | 4027.29 | 2958.04 | 486.95 | 4025.71 | 8053.00 | 33,061,198 | 8,106,353 | 33,061,197 | |
Hybrid | 1823.00 | 964.80 | 2373.24 | 883.55 | 267.65 | 5161.86 | 7535.10 | 14,624,332 | 7,584,010 | 14,623,578 | |
No subsidy | Centralized | 516.65 | 1291.62 | 2417.61 | 517.19 | 1292.48 | 2414.19 | 4831.80 | 3,891,052 | 6,809,338 | NA |
Decentralized | 1104.05 | 1837.38 | 1325.64 | 1103.97 | 1837.77 | 1324.06 | 2649.70 | 3,579,280 | 4,456,892 | NA | |
Hybrid | 1023.87 | 1718.26 | 1208.81 | 545.63 | 1363.58 | 2627.50 | 3836.31 | 3,791,126 | 5,756,581 | NA |
Subsidy | Modeling Scenario | SCi | SCj | Total SC Order Quantity | Total SC Profits | Social Welfare | Total Subsidy | ||||
---|---|---|---|---|---|---|---|---|---|---|---|
MS Profits | PA Profits | SC Profits | MS Profits | PA Profits | SC Profits | ||||||
Subsidy | Centralized | 2,163,535 | 3,245,302 | 5,408,837 | 2,159,853 | 3,239,780 | 5,399,633 | 8053.00 | 10,808,470 | 8,106,354 | 10,808,468 |
Decentralized | 11,130,718 | 5,406,349 | 16,537,066 | 11,122,012 | 5,402,120 | 16,524,132 | 8053.00 | 33,061,198 | 8,106,353 | 33,061,197 | |
Hybrid | 3,865,291 | 1,877,427 | 5,742,718 | 3,552,646 | 5,328,969 | 8,881,615 | 7535.10 | 14,624,332 | 7,584,010 | 14,623,578 | |
No subsidy | Centralized | 779,315 | 1,168,972 | 1,948,287 | 777,106 | 1,165,659 | 1,942,765 | 4831.80 | 3,891,052 | 6,809,338 | NA |
Decentralized | 1,205,998 | 585,770 | 1,791,768 | 1,203,133 | 584,379 | 1,787,512 | 2649.70 | 3,579,280 | 4,456,892 | NA | |
Hybrid | 1,002,794 | 487,072 | 1,489,866 | 920,504 | 1,380,756 | 2,301,260 | 3,8,36.31 | 3,791,126 | 5,756,581 | NA |
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Chen, Z.; Su, S.-I.I. Dual Competing Photovoltaic Supply Chains: A Social Welfare Maximization Perspective. Int. J. Environ. Res. Public Health 2017, 14, 1416. https://doi.org/10.3390/ijerph14111416
Chen Z, Su S-II. Dual Competing Photovoltaic Supply Chains: A Social Welfare Maximization Perspective. International Journal of Environmental Research and Public Health. 2017; 14(11):1416. https://doi.org/10.3390/ijerph14111416
Chicago/Turabian StyleChen, Zhisong, and Shong-Iee Ivan Su. 2017. "Dual Competing Photovoltaic Supply Chains: A Social Welfare Maximization Perspective" International Journal of Environmental Research and Public Health 14, no. 11: 1416. https://doi.org/10.3390/ijerph14111416