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

Wenyi Du, Yubing Fan and Lina Yan
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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

Sustainability, 2018, vol. 10, issue 8, 1-13

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.

Keywords: competitive supply chain; power structure; pricing strategy; South-to-North Water Diversion Project (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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