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ABSTRACT
Growing ecological concerns has led governments to utilize mechanisms such as Renewable Identification Number (RIN) in promoting biofuels as an alternative for fossil fuels. In this paper, a pricing model in a decentralized three-player biofuel supply chain with RIN mechanism is proposed and the interaction among members is analyzed using Stackelberg game. The optimal selling price of biomass, bioethanol, and RIN are obtained by solving the proposed discrete mathematical program with equilibrium constraints (DC-MPEC) problem which is transformed into a solvable mixed integer quadratic programming (MIQP) model. Finally, a real case study in Iran is presented to show the features of the model. Sensitivity analyses are performed which lead to some managerial insights into the effect of price elasticity and government policies on profits. Moreover, an evolutionary game theory approach is applied on the case study to show the long-term behavior of the members in the proposed RIN-based pricing model.