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Pricing Strategies for Competitive Water Supply Chains under Different Power Structures: An Application to the South-to-North Water Diversion Project in China

Author

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  • Wenyi Du

    (Business School, Jiangsu Normal University, Xuzhou 221116, China)

  • Yubing Fan

    (Texas A&M AgriLife Research, Vernon, TX 76384, USA)

  • Lina Yan

    (School of Accounting, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

Under two different power structures, where the supplier and the distributor, respectively, are modeled as the leader, this paper studies water pricing strategies in two competing water resources supply chains. We assume that each water supply chain consists of a risk-neutral water supplier and a risk-neutral water distributor. We build different decision models for two competitive water resources supply chains, derive the optimal decision strategies for the water supply chain members, and analyze how competition intensity affects these decisions. Analytical results show that when the supplier is the leader, its water wholesale price is always higher than that when the distributor serves as the leader. On the other hand, the retail price and the two supply chains’ channel profits depend on the competition intensity, but are independent of the power structure. To illustrate the proposed models, we apply them to examine the water pricing strategies in the South-to-North Water Diversion Project in China. The results showed significant insights into the pricing strategies of water resources in different routes of this massive water diversion project.

Suggested Citation

  • Wenyi Du & Yubing Fan & Lina Yan, 2018. "Pricing Strategies for Competitive Water Supply Chains under Different Power Structures: An Application to the South-to-North Water Diversion Project in China," Sustainability, MDPI, vol. 10(8), pages 1-13, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2892-:d:163847
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    References listed on IDEAS

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    Cited by:

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    2. Andrea Caravaggio & Luigi De Cesare & Andrea Di Liddo, 2023. "A Differential Game for Optimal Water Price Management," Games, MDPI, vol. 14(2), pages 1-15, April.
    3. Chang Su & Xiaojing Liu & Wenyi Du, 2020. "Green Supply Chain Decisions Considering Consumers’ Low-Carbon Awareness under Different Government Subsidies," Sustainability, MDPI, vol. 12(6), pages 1-12, March.
    4. Nan Xu & Yaoqun Xu, 2022. "Research on Tacit Knowledge Dissemination of Automobile Consumers’ Low-Carbon Purchase Intention," Sustainability, MDPI, vol. 14(16), pages 1-26, August.
    5. Mengdi Li & Yaoping Cui & Yaochen Qin & Zhifang Shi & Nan Li & Xiaoyan Liu & Yadi Run & Oliva Gabriel Chubwa, 2021. "Estimating the Impact of Ecological Migrants on the South-to-North Water Diversion in China," IJERPH, MDPI, vol. 18(23), pages 1-16, November.
    6. Zhisong Chen & Keith C.K. Cheung & Manyi Tan, 2019. "Inter-Basin Water Transfer Supply Chain Coordination with Ramsey Pricing," IJERPH, MDPI, vol. 16(19), pages 1-22, September.
    7. Lixi Zhou & Tijun Fan & Jie Yang & Lihao Zhang, 2022. "Monopolistic vs. Competitive Supply Chain Concerning Selection of the Platform Selling Mode in Three Power Structures," Sustainability, MDPI, vol. 14(17), pages 1-27, September.

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