When Nash Meets Stackelberg

This article introduces a class of Nash games among Stackelberg players (NASPs), namely, a class of simultaneous noncooperative games where the players solve sequential Stackelberg games. Specifically, each player solves a Stackelberg game where a leader optimizes a (parametrized) linear objective function subject to linear constraints, whereas its followers solve convex quadratic problems subject to the standard optimistic assumption. Although we prove that deciding if a NASP instance admits a Nash equilibrium is generally a [Formula: see text]-hard decision problem, we devise two exact and computationally efficient algorithms to compute and select Nash equilibria or certify that no equilibrium exists. We use NASPs to model the hierarchical interactions of international energy markets where climate change aware regulators oversee the operations of profit-driven energy producers. By combining real-world data with our models, we find that Nash equilibria provide informative, and often counterintuitive, managerial insights for market regulators. This paper was accepted by Chung Piaw Teo, optimization. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03418 .

• 저널Management Science · 70(10) · 7308–7324
• 토픽Climate Change Policy and Economics · Economics and Econometrics
• DOI10.1287/mnsc.2022.03418
• 저자Margarida Carvalho, Gabriele Dragotto, Felipe Feijoo, Andrea Lodi, Sriram Sankaranarayanan