Water-saving service supply chain cooperation under social welfare maximization

Abstract

Abstract The water-saving service (WSS) supply chain equilibrium and cooperative decision models under the scenario without/with the social welfare maximization (SWM) goal are developed, analyzed, and compared, respectively, the numerical and sensitivity analyses for all models are conducted and compared, and the corresponding management insights and policy implications are summarized in this paper. The research results indicate that: (1) the cooperation strategy outperforms the equilibrium strategy regarding the water-consumption reduction, operational performance of WSS supply chain, the corresponding social welfare, consumer surplus, and positive externalities, regardless of whether the SWM is considered or not; (2) a subsidy threshold policy under which the government only subsidizes the WSS supply chain adopting the cooperation strategy is recommended to be designed to maximize social welfare with higher positive externalities; (3) subsidizing the WSS to pursue the SWM contributes to enhancing the water-consumption reduction, improving the operational performance of WSS supply chain and its members, the corresponding social welfare, consumer surplus, and positive externalities; (4) the WSS provider would have an internal incentive to provide WSS without government subsidy when the fixed cost of WSS is low, otherwise, the WSS provider would not have an internal incentive to provide WSS unless with a government subsidy.