A Decision Making Model of Chinese Coal-Electricity Market Based on Game Theory

Because of the current coexistence of two economy systems in China, namely planned economy system and market economy system, the electricity price is restricted. Considering only one economy system, the prevailing methods to calculate the profits of two parties, coal industry and electricity industry, are not applicable in China. Based on Nash equilibrium, a synchronous reaction model is established to calculate the maximum profits of the two parties considering the special circumstance in China. The reaction function is applied to solve the proposed model. A practical case is studied using the proposed model. The results show that the model and the solving method are effective and applicable. By the practical case, we make sure that the total profit with alliance is greater than that without alliance, which provides basis for the two parties to make decisions. The profit values obtained are helpful for the government to take the balanced measures for purpose of sustainable development.