A Novel Model for the Analysis of Interactions Between Governments and Agricultures in a Study of Social Beneficial Externalities Based on the Stackelberg Game: A Case Study on Cotton Production

Subject Areas : Strategy

Mohammad Ali  Shafia ¹ (Associte Professor, Department of industrial engineering, Iran University of Science and Technology, Tehran, Iran)
Sayyede Ashraf  Moousavi Loghman ² (Phd Student in Public Policy)
Aghdas  Badiee ³ (Phd Candidate)
Kamran  Shahanaghi ⁴ (Associte Professor, Department of industrial engineering, Iran University of Science and Technology, Tehran, Iran)

Received: 1999-11-30 Accepted : 1999-11-30 Published : 2018-07-01

Keywords: Fuzzy programming, Sustainable agriculture, Government, Stackelberg game, Social benefit, Grey quadratic programming,

Abstract :

Production is a key economic activity with potential long-term social benefits that can be thoroughly realised only if governments comply with their duties towards domestic production. Governments are responsible for the production of sustainable agricultural products via appropriate allocation of subsidies and regulation of price policies that would help take advantage of the potentials underlying agricultural production. In this paper, a model is developed to investigate the interaction between two decision makers in the stackelberg game, government as leader and agriculture as follower, with the ultimate aim of providing benefits to all sectors in the society in the sustainable agriculture paradigm. The proposed model is validated and its efficiency demonstrated via a case study of cotton production as a strategic agricultural production. The model is first solved using a combination of fuzzy mathematical and grey quadratic programming methods to account for the inherent uncertainty in a number of problem parameters. The model is then analyzed against various government-producer interaction scenarios and finally, the analysis results are compared.

References:

Ai, X., & Shufeng, G. (2013). A Game Model Between Governments and Enterprises in the Green Supply Chain of the Home Appliance Industry. Journal on Innovation and Sustainability. RISUS ISSN 2179-3565, 4(1), 35-42.

Baldock, D., Hart, K., & Scheele, M. (2009). Public goods and public intervention in agriculture European network for rural development.

Bard, J. F. (1999). Practical Bilevel Optimization: Algorithms and Applications: Springer.

Bazaraa, M. S., Jarvis, J. J., & Sherali, H. D. (2011). Linear programming and network flows: John Wiley & Sons.

Brinkhuis, J., & Tikhomirov, V. (2011). Optimization: insights and applications: Princeton University Press.

Buckwell, A., Armstrong-Brown, S., Baldock, D., Bielenberg, N., Brouwer, F., & van Ittersum, M. (2009). Risk Task Force on Public goods from private land. Retrieved from

Chen, C.-H., Mai, C.-C., & Yu, H.-C. (2006). The effect of export tax rebates on export performance: Theory and evidence from China. China Economic Review, 17(2), 226-235.

Climate, E. a. T. D. (1999). Cultivating Our Futures - Taking Stock of the Multifunctional Character of Agriculture and Land. Retrieved from

Cui, L., Wu, K.-J., & Tseng, M.-L. (2016). Exploring a Novel Agricultural Subsidy Model with Sustainable Development: A Chinese Agribusiness in Liaoning Province. Sustainability, 9(1), 19.

Czyżewski, B., & Majchrzak, A. (2017). Market versus agriculture in Poland–macroeconomic relations of incomes, prices and productivity in terms of the sustainable development paradigm. Technological and Economic Development of Economy, 1-17.

Ding, B., & Huang, Y. (2012). Emergency Materials Supply Chain Coordination by the Joint Mechanism between Government and Enterprises. Asian Social Science, 8(8), 15.

Duan, T. (2010). An analysis on mining production and policy risk: Game between Chinese local government and mining investor. Paper presented at the 2010 IEEE International Conference on Advanced Management Science (ICAMS 2010).

Emam, O. (2006). A fuzzy approach for bi-level integer non-linear programming problem. Applied Mathematics and Computation, 172(1), 62-71.

Hemels, S., & Goto, K. (2017). Tax Incentives for the Creative Industries: Springer.

Hoekman, B., Olarreaga, M., & Ng, F. (2002). Reducing agricultural tariffs versus domestic support: what's more important for developing countries?

Huang, G. H. (1994). Grey mathematical programming and its application to municipal solid waste management planning.  

Jeon, C., Lee, J., & Shin, J. (2015). Optimal subsidy estimation method using system dynamics and the real option model: Photovoltaic technology case. Applied Energy, 142, 33-43.

Kallhoff, A. (2014). Why societies need public goods. Critical Review of International Social and Political Philosophy, 17(6), 635-651.

Na, Z., & Fusheng, W. (2013). The game analysis of manufacturers’ political connections on product safety in supply Chain: evidence from China. Discrete dynamics in nature and society, 2013.

Rajan, R. G. (2012). Presidential address: The corporation in finance. The Journal of Finance, 67(4), 1173-1217.

Raymond, R. T. (2010). Determining approximate Stackelberg strategies in carbon constrained energy planning using a hybrid fuzzy optimisation and adaptive multi-particle simulated annealing technique.

Schaeffer, P. V., & Loveridge, S. (2002). Toward an understanding of types of public-private cooperation. Public Performance & Management Review, 26(2), 169-189.

Sheu, J.-B., & Chen, Y. J. (2012). Impact of government financial intervention on competition among green supply chains. International Journal of Production Economics, 138(1), 201-213.

Shih, H., Cheng, C., Wen, U., Huang, Y., & Peng, M. (2012). Determining a subsidy rate for Taiwan's recycling glass industry: an application of bi-level programming. Journal of the Operational Research Society, 63(1), 28-37.

Siggel, E., & Ssemogerere, C. G. (2000). Uganda’s Policy Reforms, Industry Competitiveness and Regional Integration: A comparison with Kenya.

Sinha, A., Malo, P., & Frantsev, A. (2013). Multi-objective Stackelberg Game Between a Regulating Authority and a Mining Company: A Case Study in Environmental Economics.

Spielman, D. J., & von Grebmer, K. (2006). Public–private partnerships in international agricultural research: an analysis of constraints. The Journal of Technology Transfer, 31(2), 291-300.

Stiglitz, J. E. (1987). Some theoretical aspects of agricultural policies. The World Bank Research Observer, 2(1), 43-60.

Tirole, J. (2010). The theory of corporate finance: Princeton University Press.

Van Long, N., & Stähler, F. (2009). Trade policy and mixed enterprises. Canadian Journal of Economics/Revue canadienne d'économique, 42(2), 590-614.

Vatn, A. (2001). Transaction costs and multifunctionality. Paper presented at the OECD Workshop on multifunctionality, Paris.

Wallace, A. (1994). Sense with sustainable agriculture. Communications in soil science and plant analysis, 25(1-2), 5-13.

Wu, T., Zhou, W., Yan, X., & Ou, X. (2016). Optimal policy design for photovoltaic power industry with positive externality in China. Resources, Conservation and Recycling, 115, 22-30.

Yang, Y., & John, R. (2003). Grey systems and interval valued fuzzy sets. Paper presented at the EUSFLAT Conf.

Yang, Z., Cai, J., Dunford, M., & Webster, D. (2014). Rethinking of the relationship between agriculture and the “urban” economy in Beijing: An input-output approach. Technological and Economic Development of Economy, 20(4), 624-647.

Zhao, R., Neighbour, G., McGuire, M., & Deutz, P. (2013). A software based simulation for cleaner production: a game between manufacturers and government. Journal of Loss Prevention in the Process Industries, 26(1), 59-67.