Supporting Sustainable Development of Water Resources: A Social Welfare Maximization Game Model

Mingjing Guo, Ziyu Jiang, Yan Bu and Jinhua Cheng
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Mingjing Guo: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Ziyu Jiang: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Yan Bu: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Jinhua Cheng: School of Economics and Management, China University of Geosciences, Wuhan 430074, China

IJERPH, 2019, vol. 16, issue 16, 1-15

Abstract: Water can carry a boat but can also overturn it (human societal sustainable development). Governments faced aquatic ecosystem restoration and preservation challenges following the establishment of the United Nations Sustainable Development Goals. This paper proposes a social welfare maximization game model to analyze the dominant strategy equilibrium of enterprise-1 and enterprise-2 based on welfare maximization under the total sewage emission control policy. Under the aforementioned control policy, a stricter total sewage emission control of an enterprise corresponds to a lower enterprise output and a higher output of a competing enterprise; that is, the profit transfer effect occurs. When the government implements a relatively strict total sewage emission control policy for an enterprise, it is beneficial to reduce the amount of sewage emission from an enterprise but has no impact on the amount of sewage emission from a competing enterprise; however, the amount of sewage reduction of both enterprises will increase. If the government does not provide capital and technical support to enterprise-2, then enterprise-1 and enterprise-2 should implement total quantity control policies with different rigor degrees to avoid the one-size-fits-all phenomenon. To maximize social welfare, the government should adjust the total sewage emission control policy in time according to sewage stock changes and focus more on enterprises with insufficient capital and poor technical skills and provide financial and technical support.

Keywords: water pollution; maximization of social welfare; game; total sewage control (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
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