Game theory approach in Malaysia palm biomass industry: analysis

Abstract

In Malaysia, there are plentiful of palm biomass but not always these resources are fully utilised. In the perspective of biomass industry owner, there are three factors that affect the business decision, (i) constant and good quality supplies, (ii) process efficiency, (iii) market demand and price. The strategy considerations that respond to these factors are based on other players' competition, plantation output, mill output, logistics matter, government policy and weather. In order to model the real situation in a particular palm plantation area, game theory approach is used to analyse the best strategy of biomass industry owner. Since every players are act on their self-interest based on maximum profit, this is a noncooperative game study. A case study is modelled on two industry players, two oil mills and two plantations. Nash equilibrium is achieved by analysing the best strategies that are the best responses to other parties in the scenario. By analysing this scenario using game theory approach, an optimal noncooperative strategy can be derived. In future works, it can be applied into the decision support framework for the biomass industry management team