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Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing

Often enough, social welfare and private benefit do not align for quasi-public goods/services. The inter-basin water transfer (IBWT) project provides a vivid example of this. In this paper, following the game-theoretical approach, we derive an optimal Ramsey pricing scheme to resolve these conflicts...

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Detalles Bibliográficos
Autores principales: Chen, Zhisong, Cheung, Keith C.K., Tan, Manyi
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2019
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6801671/
https://www.ncbi.nlm.nih.gov/pubmed/31569400
http://dx.doi.org/10.3390/ijerph16193651
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author Chen, Zhisong
Cheung, Keith C.K.
Tan, Manyi
author_facet Chen, Zhisong
Cheung, Keith C.K.
Tan, Manyi
author_sort Chen, Zhisong
collection PubMed
description Often enough, social welfare and private benefit do not align for quasi-public goods/services. The inter-basin water transfer (IBWT) project provides a vivid example of this. In this paper, following the game-theoretical approach, we derive an optimal Ramsey pricing scheme to resolve these conflicts. We try to compare traditional supply chain management models with an optimal Ramsey pricing scheme, with an enforcement of coordination among firms. Using simulation techniques, we compute numerical estimates under three regimes: a standard equilibrium decision framework, a coordination decision model and a coordinated Ramsey pricing scheme. Our results show the relative welfare impact of different settings, revealing that the optimal pricing scheme based on the two-part tariff structure cannot only improve social welfare, but also ensure a target profit for participating firms. Lastly, our findings have strong policy implications for the government with profit regulation and the control of water resources.
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spelling pubmed-68016712019-10-31 Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing Chen, Zhisong Cheung, Keith C.K. Tan, Manyi Int J Environ Res Public Health Article Often enough, social welfare and private benefit do not align for quasi-public goods/services. The inter-basin water transfer (IBWT) project provides a vivid example of this. In this paper, following the game-theoretical approach, we derive an optimal Ramsey pricing scheme to resolve these conflicts. We try to compare traditional supply chain management models with an optimal Ramsey pricing scheme, with an enforcement of coordination among firms. Using simulation techniques, we compute numerical estimates under three regimes: a standard equilibrium decision framework, a coordination decision model and a coordinated Ramsey pricing scheme. Our results show the relative welfare impact of different settings, revealing that the optimal pricing scheme based on the two-part tariff structure cannot only improve social welfare, but also ensure a target profit for participating firms. Lastly, our findings have strong policy implications for the government with profit regulation and the control of water resources. MDPI 2019-09-28 2019-10 /pmc/articles/PMC6801671/ /pubmed/31569400 http://dx.doi.org/10.3390/ijerph16193651 Text en © 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
spellingShingle Article
Chen, Zhisong
Cheung, Keith C.K.
Tan, Manyi
Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title_full Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title_fullStr Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title_full_unstemmed Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title_short Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing
title_sort inter-basin water transfer supply chain coordination with ramsey pricing
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6801671/
https://www.ncbi.nlm.nih.gov/pubmed/31569400
http://dx.doi.org/10.3390/ijerph16193651
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