Optimal biofuel supply chain design under consumption mandates with renewable identification numbers
The Renewable Identification Number (RIN) system is a tracking mechanism that enforces the U.S. Renewable Fuel Standard by monitoring obligated parties’ compliance with the biofuel consumption mandates. This paper incorporates the RIN system into the design of a biofuel supply chain that addresses independent decisions of non-cooperative farmers, biofuel manufacturers, and blenders. Game-theoretic models are developed to examine the impacts of the RIN system on individual stakeholders’ decisions (e.g., on farmland use, bio-refinery investment, biofuel production) and the competition between food and biofuel industries, in both a perfectly competitive scenario and a monopoly scenario. For the perfectly competitive scenario, Nash equilibrium can be obtained by solving a convex optimization problem. For the monopoly scenario, a bi-level Stackelberg leader–follower model is developed, from which we found that a rigid mandate on blenders may suppress the total biofuel production. To avoid such unintended consequences, a relaxed unit-RIN based penalty scheme is proposed and shown to improve the overall biofuel supply chain performance. Managerial insights are drawn from a numerical case study for the state of Illinois.
Year of publication: |
2013
|
---|---|
Authors: | Wang, Xiaolei ; Ouyang, Yanfeng ; Yang, Hai ; Bai, Yun |
Published in: |
Transportation Research Part B: Methodological. - Elsevier, ISSN 0191-2615. - Vol. 57.2013, C, p. 158-171
|
Publisher: |
Elsevier |
Subject: | Supply chain network | Biofuel | Spatial equilibrium | Tradable credits | MPEC |
Saved in:
Online Resource
Saved in favorites
Similar items by subject
-
Policy shocks and market-based regulations : evidence from the renewable fuel standard
Lade, Gabriel E., (2016)
-
Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium
Bai, Yun, (2012)
-
Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium
Yun Bai, (2012)
- More ...
Similar items by person