A decentralized incentive mechanism for company-wide energy consumption reduction
Name
706817655-MIT.pdf
Description
Full printable version
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3.06 MB
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Adobe PDF
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Author(s)
Wang, Jingxi, S.M. Massachusetts Institute of Technology
Advisor(s)
Georgia Perakis.
Date Issued
2010
Publisher
Massachusetts Institute of Technology
Abstract
This thesis proposes a decentralized reward-based incentive mechanism to address the problem of noncomplying subsidiaries when the parent company wish to meet its targeted energy consumption level. Besides its effectiveness in ensuring compliance, the proposed mechanism is advantageous as it is able to induce the optimal subsidiary behavior that maximizes the company profit given a carefully chosen reward allocation scheme. In addition, when the company is willing to trade part of its profit for an operationally simple mechanism, simple uniform allocation scheme is highly effective when the subsidiaries exhibit certain degree of symmetry. The results above are drawn from our investigation on a more general model: Cournot competition under a joint constraint. For this model, we study the equilibrium behavior under free competition and compare the profit and total surplus achieved with the corresponding values when different levels of coordination are introduced in the market (i.e., the Monopoly market and the society-wide coordinated market). We establish tight upper bounds for the profit and total surplus loss due to lack of coordination as functions of various market characteristics (i.e., number of firms, intensity of competition and asymmetry between firms).
Description
Thesis (S.M.)--Massachusetts Institute of Technology, Computation for Design and Optimization Program, 2010.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 83-85).
Subjects
Computation for Design and Optimization Program.
MIT Department
Massachusetts Institute of Technology. Computation for Design and Optimization Program
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