This paper addresses the interactions in the economic system with one importer and several exporters of the homogeneous product on the example of the international coal market. The importer sets prices and additional tariffs for each supplier country for a number of coal resources types. The suppliers determine the quantity of the supplied product, in consideration of their costs and supply capabilities. To optimize such a system, we propose a hierarchical (bilevel) model where the upper-level (the importer) aims to minimize the costs of each product type, taking into account the satisfaction of its needs. And the goal of each exporter is to maximize its profit, given the established prices and tariffs, as well as its own production costs and supply capacity. To develop numerical methods for the considered problem, we begin by reformulating the bilevel problem as a single-level nonconvex optimization problem, substituting the lower level with its optimality conditions. Next, we apply the Exact Penalization Theory along with the Global Search Theory (GST) to tackle the transformed problem. GST involves expressing nonconvex functions as DC representations (that is, as the difference of two convex functions) and constructing both local and global search methods tailored to the distinct features of the examined problem.

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On a Bilevel Optimization Model of Interaction Between One Importer and Several Exporters on the Coal Market

  • Andrei V. Orlov,
  • Batbileg Sukhee

摘要

This paper addresses the interactions in the economic system with one importer and several exporters of the homogeneous product on the example of the international coal market. The importer sets prices and additional tariffs for each supplier country for a number of coal resources types. The suppliers determine the quantity of the supplied product, in consideration of their costs and supply capabilities. To optimize such a system, we propose a hierarchical (bilevel) model where the upper-level (the importer) aims to minimize the costs of each product type, taking into account the satisfaction of its needs. And the goal of each exporter is to maximize its profit, given the established prices and tariffs, as well as its own production costs and supply capacity. To develop numerical methods for the considered problem, we begin by reformulating the bilevel problem as a single-level nonconvex optimization problem, substituting the lower level with its optimality conditions. Next, we apply the Exact Penalization Theory along with the Global Search Theory (GST) to tackle the transformed problem. GST involves expressing nonconvex functions as DC representations (that is, as the difference of two convex functions) and constructing both local and global search methods tailored to the distinct features of the examined problem.