A bi-level optimization model for technology selection

Optimal selection of technologies by multiple decision-makers using multiple criteria is a common problem which can be modeled as a leader-follower game. This study develops a bi-level, bi-objective mixed integer non-linear program for technology selection. Both leader and follower choose their preferred alternative based on simple additive weighting of techno-economic criteria, and the leader can influence the follower’s choice via an economic incentive. The players have different sets of priority weights. The optimal solution occurs when both agree on the final technology choice. The original model is reformulated as a tractable single-level, single-objective mixed integer linear program and demonstrated on a case study on the selection of technologies for climate change mitigation. The results of the case study show how a calibrated economic incentive can be imposed by the leader on the follower to ensure the agreement of their technology choice. Implications of this methodology for practical problems are discussed.