Article Contents
Article Contents

# Study on government subsidy in a two-level supply chain of direct-fired biomass power generation based on contract coordination

• *Corresponding author: Kun Fan

The research is supported by Ministry of Education Humanities and Social Sciences Foundation of China (No.21YJA630012)and Beijing Municipal Social Science Foundation (No.16GLC059)

• Biomass power generation is helpful to build a clean, low-carbon, and green energy system, but the shortage of raw materials supply severely restricts the development of the biomass power generation industry in China. To solve problems of supply chain disharmony and low efficiency of government subsidy caused by stochastic factors in biomass power supply chain, this paper studies the decision-making of government subsidy on biomass power generation supply chain. First, a two-level supply chain model under stochastic supply and stochastic output environment is built. The two-level supply chain consists of farmers and the biomass power plant. Second, to achieve the coordination of the two-level supply chain through the calculation of the model, it sets up the combined contract model based on surplus compensation, shortage penalty, and revenue sharing. Then, the validity of the contract is demonstrated by the data obtained from the field survey. Finally, depending on the model and contract coordination results of the supply chain, the impacts of government subsidies on two members' decision-making are analyzed, and the changes of members' profits and chain's profits are discussed. Therefore, the government subsidy strategy for biomass direct-fired power generation is proposed.

Mathematics Subject Classification: Primary: 58F15, 58F17; Secondary: 53C35.

 Citation:

• Figure 1.  The expected profit of whole supply chain under centralized decision-making

Figure 2.  Expected profit of farmers and foresters and the biomass power plant respectly

Figure 3.  Profit of the supply chain under different subsidy distribution policies

Table 1.  Situation under different subsidy distribution policies when total subsidy value = 350

 $r_A$ $r_B$ r b $\lambda$ x q 0 7/18 259 55 $13.64\%$ 161135 173087 10 17/45 265 47 $11.63\%$ 164141 173020 20 11/30 271 38 $9.52\%$ 167091 172956 30 16/45 278 29 $7.32\%$ 169989 172895 40 31/90 285 20 $5.00\%$ 172838 172838 50 1/3 292 10 $2.56\%$ 175639 172783

Table 2.  Situation under different subsidy distributions when total subsidy value = 200

 $r_A$ $r_B$ $E(\pi_A)$ $E(\pi_B)$ $E(\pi_C)$ x q 0 2/9 2999732 18998304 21998036 155921 167486 10 19/90 2455410 18661118 21116528 158725 167310 20 1/5 1928749 18323116 20251865 161468 167135 30 17/90 1419743 17983412 19403156 164153 166959 40 8/45 928479 17641108 18569587 166783 166783 50 1/6 455139 17295277 17750416 169359 166605

Table 3.  Situation under different subsidy distribution policies

 $r_A$ $r_B$ $E(\pi_A)$ $E(\pi_B)$ $E(\pi_C)$ x q 0 0 -1407826 -8916234 -10324060 144216 154913 10 0 -1116079 -8482206 -9598285 147293 155260 20 0 -843398 -8012288 -8855686 150340 155617 30 0 -592460 -7504496 -8096956 153361 155983 40 0 -366136 -6956586 -7322722 156358 156358 50 0 -167527 -6366028 -6533555 159334 156743 0 0.057 -310685 -1967673 -2278359 148015 158994 10 0.057 -178318 -1355214 -1533532 151145 159321 20 0.057 -73484 -698095 -771579 154244 159658 30 0.057 496 6284 6780 157314 160003 40 0.057 40045 760846 800891 160357 160357 50 0.057 41286 1568873 1610159 163376 160719 0 0.157 1675358 10610602 12285960 153230 164596 10 0.157 1518248 11538685 13056933 156431 164893 20 0.157 1318612 12526818 13845431 159597 165198 30 0.157 1072002 13578691 14650692 162729 165511 40 0.157 773601 14698425 15472027 165831 165831 50 0.157 418174 15890630 16308805 168905 166159 0 0.257 3712806 23514436 27227242 157182 168841 10 0.257 3257909 24760109 28018018 160434 169112 20 0.257 2745391 26081216 28826607 163647 169390 30 0.257 2169674 27482542 29652217 166824 169675 40 0.257 1524706 28969420 30494127 169967 169967 50 0.257 803889 30547792 31351681 173080 170266 0 0.357 5783661 36629858 42413519 160282 172171 10 0.357 5025561 38194268 43219829 163572 172420 20 0.357 4194682 39849485 44044167 166820 172676 30 0.357 3284320 41601399 44885719 170031 172937 40 0.357 2287187 43456554 45743741 173205 173205 50 0.357 1195321 45422232 46617553 176346 173479

Table 4.  Profit statement of biomass power plant under different subsidies when $r_A$ = 20

 $r_B$ $r_B+p_B$ x Q $R(\pi_B)$ $C(\pi_B)$ $E(\pi_B)$ p 0 0.393 150340 155617 57988171 66000459 -8012288 -13.82% 0.007 0.4 150862 156157 59200760 66326206 -7125446 -12.04% 0.057 0.45 154244 159658 67808514 68506609 -698095 -1.03% 0.107 0.5 157120 162635 76338929 70475997 5862932 7.68% 0.157 0.55 159596 165198 84805198 72278380 12526818 14.77% 0.207 0.6 161753 167430 93218692 73947086 19271606 20.67% 0.257 0.65 163647 169390 101586998 75505782 26081216 25.67% 0.307 0.7 165324 171127 109917862 76974277 32943585 29.97%
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