The Effect of Upper Level’s Carbon Emission Policy to Underlying One’s Generation Decision—Based on a Bi-level Multi-objective Decision Model

Abstract

In this paper, the game theory between the power plants’ generation decision and the government’s policy making is well described according to its characteristic. A bi-level multi-objective decision model is presented. In the model, the upper level enacts initial upper carbon limit, the limit will affect the power plant as an underlying decision-maker to make generation decision and also influence the whole objective function. Under this precondition, the underlying decision-makers choose its own optimal decision to meet its objective function, and finally upper policy makers make policy adjustment according to the reaction of underlying one. Among these dynamic interaction, optimal policy spheres can be drawn through the numeric result of the model.