Impact of hybrid-enabling technology on Bertrand-Nash equilibrium subject to energy sources

In this chapter, we quantify an optimal level of subsidy for the sharing of hybrid-enabling technology innovation in an energy market while examining its Bertrand-Nash equilibrium. We formulate this as a Stochastic Differential Game (SDG) and analyze the stability of the Stuckenberg, Nash and cooperative equilibria via a feedback control strategy. We then adopt limit expectation and variance of the improvement degree to identify the influence of the external environment on the decision maker. We show that the game depends on its parameters and the equilibria chosen. Ultimately, our use of short-run price competition characterized by strategic supplies for renewable and fossil resources provides a more robust model than that presented by Bertrand-Edgworth with endogenous capacity. As a result, we highlight that R&D investments in hybrid-enabling technology can ensure immediate reliability and affordability within energy production and implementation of policy instruments.