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Description
In this example there is a government at the policy making level wanting to influence the behavior of several companies at the policy receiving level. In order to achieve this, the government implements tax and subsidy policies. The companies make their own optimal decisions given the tax and subsidy rates announced by the government. Taking into account this rational behavior of the companies, the government problem is to decide upon appropriate tax and subsidy levels.
On the first demo page, the policy receiving submodels are solved for a pre-specified taxation level. On the second demo page, the two level problem is solved using an intuitive and general approach in order to find simultaneously the appropriate tax and subsidy levels and the optimal responses from the companies. Finally, on the third demo page, a sensitivity analysis is carried out with respect to one of the key parameters.
Keywords
Environmental Economics, Stackelberg Games
Industries
Model Types
Download AIMMS Example
You can download an AIMMS example dealing with this problem via the link below, and run it after installing the AIMMS software. If you don't have an AIMMS license yet, you can download a free license of AIMMS.
ftp://ftp.aimms.com/pub/Download/Examples/Two Level Decision.aimmspack
Please make sure to save this file including the .aimmspack extension so that it can be opened by AIMMS.
This example application is a simplification of reality. Please do not hesitate to contact us to discuss how AIMMS enables you to build a complete optimization application that captures the full complexity of your problem.
Screenshot AIMMS Example
