An evolutionary game-theoretic approach to study the technological transformation of the industrial sector toward renewable electricity procurement: A case study of Iran

Abstract

Electricity shortages severely affect the production chain and cause damage to manufacturing productivity. This study examines how the industrial sector can transform technological innovations toward renewable electricity procurement. We consider two strategies for manufacturers: purchasing electricity from a technology-based supplier (TB strategy) and purchasing it from a non-technology-based supplier (NTB strategy). Manufacturers need technological transformation, such as upgrading their electrical system toward digitalization to manage power outages. We examine manufacturers' pricing decisions and their long-term behavior to adopt the TB and NTB strategies using a one-population evolutionary game-theoretic approach. Also, we investigate the majority of manufacturers' population that eventually choose the best strategy. Moreover, we apply the present model to real-world cases of Iran's cement, steel, and paper industries. The results show that the evolutionary behavior of sectors with high annual electricity consumption, such as steel, converges to the TB strategy faster than cement and paper industries. In contrast, the cement and paper industries are more sensitive to subsidy allocation than the steel industry with respect to electricity procurement strategies.