Marousi, Asimina; Pinto, Jose M; Papageorgiou, Lazaros G; Charitopoulos, Vassilis M; (2023) Multi-period optimisation of oligopolies with contracts: A cooperative approach to customer fairness. In: Kokossis, Antonios C and Georgiadis, Michael C and Pistikopoulos, Efstratios, (eds.) Computer Aided Chemical Engineering. (pp. 1603-1608). Elsevier: Amsterdam, The Netherlands.

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Abstract

In an ever-increasing economic instability, cooperation among members of the same market can be proven an efficient way to build resilience. A growing interest has been observed among the process systems engineering community for integrating process design with game theory towards decentralised decision making. In this work, we aim to find the optimal supply chain design in oligopoly case studies by formulating a multi-period cooperative game among manufacturers and customers. Different fairness approaches are examined to maximise the firms’ profits and customers’ savings by determining the optimal customer allocation and sequencing of different contracts. Since the Nash fairness scheme results in a nonlinear objective, SOS2 approximation is employed resulting in an MILP class. The examined case studies are derived from a duopoly and an oligopoly in the liquid gas market. Computation results suggest that a cooperation can be beneficial for the payoffs of the firms and customers.

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