Higher Social Welfare Research Articles

Cross‐Ownership, Green Managerial Delegation, and Emission Taxation

ABSTRACTThis paper analyzes the effects of cross‐ownership on green managerial delegation contracts in a Cournot duopoly market with emission tax policy. We show that higher cross‐ownership will always exacerbate environmental degradation and diminish societal welfare, even with green managerial delegation. Compared with sales delegation, green managerial delegation under such ownership always yields higher environmental damage and lower social welfare. Compared to concurrent regulation, noncommitted emission taxation always leads to lower environmental damage and higher social welfare, although green managerial delegation will not be chosen in the latter. Our findings have important policy implications.

Intersecting social welfare with resilience to streamline urban flood management

Urban policymakers have long searched for stormwater management plans that incentivize stakeholders to adopt Green Infrastructure (GI) while effectively reducing the vulnerability of drainage systems. In this regard, our research introduces a novel framework to develop GI strategies that provide both hydrological resiliency and social acceptance. To achieve this, first, using a coupled Stormwater Management Model (SWMM) and Non-dominated Sorting Genetic Algorithm-II (NSGA-II), optimal alternatives for GI planning were generated. In the optimization process, we used a novel Simple Urban Flood Resilience Index (SUFRI) to consider the internal performance of the system in identifying resilient plans. Derived management strategies warrant runoff volume reduction and resilience improvement up to 31.3% and 55.1%, respectively. In the next step, Utilitarian-based Social Welfare (USW) was employed to clarify the socio-economic behavior of management strategies. Results indicate that while financial incentives significantly motivate developers to implement GI, they cannot guarantee high social welfare, and achieving a sustainable solution requires evaluating both SUFRI and USW layers under different subsidy levels. Visualizing the SUFRI layer revealed a critical failure in the resiliency trend of solutions that cannot be detected by evaluating simpler metrics, such as runoff volume reduction. This highlights the importance of the SUFRI method in conducting deeper evaluations and preventing financial waste. Finally, we navigated the intersection of USW and SUFRI measures to reach an ideal management plan with optimal supporting level. Our findings showed that the selected solution with the highest social acceptability can improve the resiliency of the system by 29 %. This study is a novel combination of the hydrological and social aspects of stormwater management, enabling decision-makers to take significant steps towards sustainable urban development.

Single rollover or dual rollover: How a monopoly NEV manufacturer responds to NEV credit policy

The NEV credit policy plays a crucial role in advancing the new energy vehicle (NEV) industry and environmental conservation. This study investigates the monopoly NEV manufacturer’s optimal rollover strategy (Single Rollover (SR) vs. Dual Rollover (DR)) and pricing scheme (skimming vs. penetration) under the government’s stricter calculation criteria for NEV credit policy, considering a two-period market with strategic consumers. We find that the NEV manufacturer typically adopts a skimming pricing scheme in DR strategy, while a penetration pricing scheme in SR strategy. The choice between SR and DR strategy hinges on the government’s calculation criteria for NEV credits, product upgrade speed, and vehicle environmental performance improvement. When the calculation criterion for NEV credits is moderate, or when it is low, coupled with fast product upgrade speed and marginal improved environmental performance of the new vehicle, SR strategy is beneficial to the NEV manufacturer to avoid the cannibalization between new and old vehicles. In contrast, the NEV manufacturer can benefit from DR strategy through price discrimination between new and old vehicles to attract consumers from different market segments. However, stricter calculation criteria for NEV credits do not always result in higher social welfare.

A Decentralized Optimization Algorithm for Multi-Agent Job Shop Scheduling with Private Information

The optimization of job shop scheduling is pivotal for improving overall production efficiency within a workshop. In demand-driven personalized production modes, achieving a balance between workshop resources and the diverse demands of customers presents a challenge in scheduling. Additionally, considering the self-interested behaviors of agents, this study focuses on tackling the problem of multi-agent job shop scheduling with private information. Multiple consumer agents and one job shop agent are considered, all of which are self-interested and have private information. To address this problem, a two-stage decentralized algorithm rooted in the genetic algorithm is developed to achieve a consensus schedule. The algorithm allows agents to evolve independently and concurrently, aiming to satisfy individual requirements. To prevent becoming trapped in a local optimum, the search space is broadened through crossover between agents and agent-based block insertion. Non-dominated sorting and grey relational analysis are applied to generate the final solution with high social welfare. The proposed algorithm is compared using a centralized approach and two state-of-the-art decentralized approaches in computational experiments involving 734 problem instances. The results validate that the proposed algorithm generates non-dominated solutions with strong convergence and uniformity. Moreover, the final solution produced by the developed algorithm outperforms those of the decentralized approaches. These advantages are more pronounced in larger-scale problem instances with more agents.

Independence of Irrelevant Alternatives under the Lens of Pairwise Distortion

We give a quantitative analysis of the independence of irrelevant alternatives (IIA) axiom. IIA says that the society's preference between x and y should depend only on individual preferences between x and y: we show that, in several contexts, if the individuals express their preferences about additional (``irrelevant'') alternatives, this information helps to estimate better which of x and y has higher social welfare. Our contribution is threefold: (1) we provide a new tool to measure the impact of IIA on social welfare (pairwise distortion), based on the well-established notion of voting distortion, (2) we study the average impact of IIA in both general and metric settings, with experiments on synthetic and real data and (3) we study the worst-case impact of IIA in the 1D-Euclidean metric space.

An Auction-Based Approach for Multi-Agent Uniform Parallel Machine Scheduling with Dynamic Jobs Arrival

This paper addresses a multi-agent scheduling problem with uniform parallel machines owned by a resource agent and competing jobs with dynamic arrival times that belong to different consumer agents. All agents are self-interested and rational with the aim of maximizing their own objectives, resulting in intense resource competition among consumer agents and strategic behaviors of unwillingness to disclose private information. Within the context, a centralized scheduling approach is unfeasible, and a decentralized approach is considered to deal with the targeted problem. This study aims to generate a stable and collaborative solution with high social welfare while simultaneously accommodating consumer agents’ preferences under incomplete information. For this purpose, a dynamic iterative auction-based approach based on a decentralized decision-making procedure is developed. In the proposed approach, a dynamic auction procedure is established for dynamic jobs participating in a real-time auction, and a straightforward and easy-to-implement bidding strategy without price is presented to reduce the complexity of bid determination. In addition, an adaptive Hungarian algorithm is applied to solve the winner determination problem efficiently. A theoretical analysis is conducted to prove that the proposed approach is individually rational and that the myopic bidding strategy is a weakly dominant strategy for consumer agents submitting bids. Extensive computational experiments demonstrate that the developed approach achieves high-quality solutions and exhibits considerable stability on large-scale problems with numerous consumer agents and jobs. A further multi-agent scheduling problem considering multiple resource agents will be studied in future work.

Research on Government Green Subsidy Strategy of Heterogeneous Agricultural Product Supply Chain

To promote dual carbon targets, this study builds a heterogeneous agricultural product supply chain comprised of a green agricultural product producer, an ordinary agricultural products producer, and a retailer. This study constructs four strategic government green subsidy models, wherein the nongovernment subsidy, government subsidy for green agricultural producers, subsidy for green consumers, and dual subsidies. Based on Stackelberg’s game theory, this study analyzes the impact of differentiated green subsidies on heterogeneous agricultural product supply chain decision-making. The results show that the government will provide green subsidies only when the input cost coefficient of green quality is within a certain threshold. Consumers’ preference for green agricultural products will improve the level of green quality. The dual subsidy strategy of the government has the highest social welfare and can stimulate the motivation of green production. When considering the subsidy expenditure, the green consumer subsidy strategy can achieve a higher level of green quality and promote the consumption of green agricultural products. The government should combine different subsidy target effects and subsidy effects to provide appropriate green subsidy strategies. According to the corresponding subsidy strategy, the producers and retailers of heterogeneous agricultural products carry out green investment, reasonable pricing, and precision marketing.

Post privatization of high-speed rail with corporate social responsibility (CSR) in an international transportation market: Mandatory CSR versus voluntary CSR

This study considers an international transportation market wherein a high-speed rail (HSR) firm engaging in corporate social responsibility (CSR) competes with both domestic and foreign airlines with differentiated services. We investigate and compare two CSR types, mandatory CSR, imposed by the government, and voluntary CSR, chosen by the HSR operator, and show that mandatory CSR can be lower or higher than voluntary CSR, depending on the transportation subsidy types offered. With uniform subsidies, mandatory CSR together with a higher subsidy is lower than voluntary CSR, which yields higher profits for domestic firms and higher social welfare, while the opposite result can be found with discriminatory subsidies. We further explore the welfare effect of HSR privatization policies with CSR activities. We find that irrespective of the CSR types and subsidy types, privatization with subsidies always improves social welfare; however, privatization with mandatory (voluntary) CSR improves (reduces) social welfare in the absence of subsidies. These findings suggest that post-privatization with CSR activities may be harmful to society without an appropriately designed subsidy policy and should be monitored by antitrust agencies.

Output-Oriented Agricultural Subsidy Design

Many governments subsidize the agricultural industry, trying to raise the market outputs either for domestic needs or for export. In many countries, particularly developing countries, the producers’ market may be fragmented, involving a large number of farmers with variable productivity levels. The format of subsidies can have significantly different implications for farmers in different market segments. In this study, we examine four types of subsidies. A planting subsidy is paid to a farmer based on the amount of input, and a harvesting subsidy compensates a farmer for the cost incurred during the process of output collection and distribution. The government may also offer a combined subsidy under which a farmer gets paid for both planting and harvesting, or it may offer a selective subsidy under which a farmer can choose to be subsidized on either planting or harvesting but not both. In addition to examining the efficiency of budget spending and social welfare, two common performance measures studied in various contexts, we thoroughly analyze the implications of subsidies on the output and wealth distributions among the farmers. In general, subsidizing on harvesting or overly compensating on planting can increase the disparity among the farmers, whereas an appropriate level of planting subsidy helps to balance the distributions of the farmers’ output and profit. A comprehensive evaluation of the government’s policies reveals that the harvesting subsidy, while inducing the most dispersed output and profit distributions, leads to the most efficient use of input resources and the highest social welfare. The planting subsidy, although being the most effective in balancing the farmer income for a moderate output increase, performs poorly in budget spending, resource usage, and welfare generation when the government sets an aggressive target for output increase. In such a situation, the combined subsidy can offer the most evenly distributed farmer income, with the least amount of budget needed to achieve the output target. This paper was accepted by David Simchi-Levi, operations management. Funding: This work was partially supported by the National Natural Science Foundation of China [Grants 71471062, 72032001 and 71972071] and the Shanghai Sailing Program [Grant 22YF1451000]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.4749 .

Can Ride-Hailing Platforms be Immune to Dual-Fairness Concerns?

The rapid development of ride-hailing platforms has a substantial impact on urban transportation ecosystems, which raises the issue of fairness concerns both vertically and horizontally. To investigate the effects of dual-fairness concerns on the ride-hailing platform, this article studies a taxi and ride-hailing system, which captures the vertical interactions between the ride-hailing platform and the ride-hailing driver with vertical fairness concern, and the horizontal competition between the ride-hailing driver and the taxi driver with horizontal fairness concern. Two incentive strategies (i.e., revenue and demand sharing strategy and ride-hailing fare subsidy strategy) for the ride-hailing platform are designed to relieve the negative impact of fairness concerns. Government’s regulation on taxi fare is also discussed in this article. By analyzing the dynamic game models that involve these stakeholders, we find that: 1) both the vertical and the horizontal fairness concerns will lower the utility of the ride-hailing platform; 2) the revenue and demand sharing strategy and the ride-hailing fare subsidy strategy can enhance the utility of the ride-hailing platform by relieving the negative impact of horizontal and vertical fairness concerns, respectively; and 3) with the government’s regulation on taxi fare, the negative impact of dual-fairness concerns can be relieved, and a higher social welfare can be achieved.

Pricing and carbon reduction strategies for vertically differentiated firms under Cap-and-Trade regulation

This paper develops a price and low-carbon competition model for two vertically differentiated firms, a high-quality manufacturer (HM) and a low-quality manufacturer (LM), with consumers who prefer low-carbon products. The implementation of the cap-and-trade regulation (CATR) by the government is essential for the carbon trading market where firms can choose to buy (resp., sell) carbon quota when the unit carbon emission reaches above (resp., below) the allocated quota. An investigation is conducted into how the pricing and carbon reduction rate (CRR) of manufacturers would be affected by the CATR and low-carbon preference of consumers. In the absence of CATR, price and CRR always show a positive correlation for a manufacturer. However, under the CATR, hiking price is not necessarily the best choice for the manufacturer when the CRR is increased. Furthermore, contrary to the conventional wisdom, we demonstrate that in order to motivate manufacturers to increase CRR, the government should increase the unit carbon quota rather than reduce it. Moreover, it is demonstrated in this paper that the enforcement of the CATR does not necessarily result in a higher CRR, a lower total carbon emission, or higher social welfare. The government should be mindful in designing the CATR and choosing the unit carbon quota to achieve the desired outcome.

Comparison of Educational Subsidy Schemes in an Endogenous Growth Model

This study considers a three-period overlapping generations model with an endogenous growth setting, in which an agent borrows in the first period and repays the loan in the second period under a perfect credit market. Two educational subsidy schemes are considered: one is provided when an agent borrows and the other is provided when the agent repays their loan. This study compares the growth rates and social welfare under each educational subsidy scheme at a unique balanced growth path equilibrium. The first contribution of this paper is that it provides sufficient conditions under which the growth rate in one scheme is higher than that in the other. A key to determining the size relationship of growth rates is whether the production of goods and services is physical-capital-intensive, which determines the size of the interest rate. The second contribution is that it shows that higher growth and higher social welfare may not be achieved simultaneously. Specifically, this paper presents a case wherein, even if the growth rate when student loans are subsidized is higher than that when the cost of education is subsidized, social welfare defined by the Golden Rule criterion in the former scheme can be lower than that in the latter scheme.

A STRATEGIC APPROACH TOWARDS THE PROJECT OF POPULATION SETTLEMENT AND SOCIAL DEVELOPMENT IN THE LIBERATED TERRITORIES

As a result of purposeful political and economic activities conducted in the direction of the development of Azerbaijan, as well as the building of the army, our territories occupied by Armenia were liberated from occupation for nearly 30 years. Our glorious army restored the territorial integrity of Azerbaijan in the 44-days’ Patriotic War. Successful socio-economic and political achievements, national and multicultural values create confidence that the power of Azerbaijan, which is the junction of East and West, will increase even more in the coming years. These opportunities guarantee the strengthening of Azerbaijan’s economic sovereignty and its transformation into a powerful state with a high social welfare society based on modern living standards in the period up to 2030. The state of Azerbaijan has chosen the path of developing a socially oriented market economy in order to further increase the welfare of the population in the country. Against the background of these economic events, the government of Azerbaijan is highly sensitive to the issue of population settlement in the territories that liberated from occupation. Purpose – It is the study of the theoretical and methodological bases of the settlement of the population in the territories freed from occupation and the study of the strategic approach in this direction. Methodology – in the article economic analysis methods, analysis, synthesis, economicstatistical, sociological and comparative analysis were used. Findings – As a result of the economic analysis of the return of the population to the Karabakh zone, it can be noted that despite the fact that this process started nearly 2 years ago, quite a lot of work has been done. For the purposes of social development in the region, a wider diversification of self-employment is appropriate.

Delivery of private toll roads: Incentive strategies for improving service quality and social welfare

Managing the service quality of toll roads delivered by using Public-Private Partnerships (PPPs) to ensure value for money to taxpayers is challenging for governments worldwide. An absence of critical research in this area has exacerbated this challenge. The upshot, in this instance, has been an inability for governments to engender and enact effective incentive strategies to operate and maintain private toll roads. To fill this gap, this paper aims to identify and examine incentive strategies for improving the operational quality of toll roads delivered by private entities. We develop a game model with four scenarios and then compare relevant decision behaviour and social welfare. The analysis reveals that only when the shadow cost of public funds is below a specific threshold there can be a feasible incentive strategy for ensuring quality improvement and higher social welfare. Furthermore, an incentive contract with a predetermined quality can enable a higher operational quality while requiring a higher incentive intensity. The contributions of this research are twofold: (1) we propose an enhanced model that is useful for governments to examine the impacts that different incentive strategies will have on the performance of transport projects; (2) we give an enhanced insight to support decision-making for incentives towards transport asset operations. This research will also be beneficial for governments in enhancing toll roads’ operational quality and social welfare for taxpayers.

Near Optimal Learning-Driven Mechanisms for Stable NFV Markets in Multitier Cloud Networks

More and more 5G and AI applications demand flexible and low-cost processing of their traffic through diverse virtualized network functions (VNFs) to meet their security and privacy requirements. As such, the Network Function Virtualization (NFV) market has been emerged as a major service market that allows network service providers to trade their network services among customers. Since each service market usually involves complex interplays among players with different roles, efficient mechanisms that guarantee stable and efficient operations of the NFV market are urgently needed. One fundamental problem in the NFV market is how to maximize the social welfare of all players so that all players have incentives to participate in the activities of the market. In this paper, we first formulate a novel social welfare maximization problem in an NFV market of a multi-tier edge cloud network, with the aim to maximize the total revenue collected from all players, and we implement VNF services on Virtual Machines (VMs) leased by service providers to fulfill customers with service requests, where the edge cloud network consists of both cloudlets in edge networks and remote data centers in the core network. We then design an efficient incentive-compatible mechanism for the problem, and analyze the existence of a Nash equilibrium of the mechanism. Also, we consider an online social welfare maximization problem with uncertain values of customers and without the knowledge of future request arrivals, for which we devise an online learning algorithm by adopting the Multi-Armed Bandits (MAB) method with a bounded regret. We finally evaluate the performance of the proposed mechanisms through simulations and a testbed. Results show that the proposed mechanisms deliver up to 27% higher social welfare than those of existing studies

Strategic bidding of wind power producers in electricity markets in presence of information sharing

In order to facilitate the growing share of Renewable Energy Sources (RES) in power systems around the world, a cost-effective integration of RES into the electricity market is essential. In addition to numerous technical challenges, the integration of RES-based generation creates some market design challenges. For example, monitoring market power abuse by RES-based electricity generation companies may be not straightforward, given the variable and limitedly predictable availability of these resources, not known by the regulator. In this context, this paper investigates the impact of sharing wind power forecasts among market participants on wind power producers’ (WPPs’) bidding behaviour. An analytical model that captures the strategic price-making behaviour of competing WPPs on the day-ahead electricity market is provided. A best response function is provided, showing the strategic quantity bid of a price-making WPP in function of the bids of other market participants. Subsequently, a ‘multiple leaders-common market clearing’ problem is formulated as a Nash game between the strategic WPPs. Last, we allow WPPs to make their individual wind power forecasts available to their competing WPPs. When all price-making market participants possess the forecasts of each WPP, all strategic agents estimate the market outcome correctly. On the contrary, with minimal information sharing, the price-making WPPs use an assumption on the behaviour of the other WPPs in the strategic determination of their quantity bids. Sharing information on individual forecasts may lead to a higher or lower wind power participation into the day-ahead market, profits for WPPs and social welfare. On the one hand, systems in which all the WPPs would bid above their mean forecast lead to a lower wind power participation when sharing individual forecasts among WPPs, hence, a lower social welfare. Additionally, the profits for WPPs increase. On the other hand, a higher wind power participation is realised when sharing forecasts for systems in which all WPPs bid below their mean forecast, hence a higher social welfare and lower WPP profits. These insights are useful for policy makers and regulators in order to ensure transparent and competitive electricity markets.

The impact of social welfare and COVID-19 stringency on the perceived utility of food apps: A hybrid MCDM approach

The COVID-19 pandemic has created enormous challenges for society due to the various ways of impacting health. This paper focuses on the impact of the COVID-19 pandemic on people's food consumption patterns in the online environment. We investigate food app reviews and examine whether countries with a high rate of success with COVID-19 control consume more unhealthy food through mobile apps. We also investigate whether the population of countries with low social welfare eat more unhealthy food during the COVID-19 pandemic compared to countries with high social welfare. We take a hybrid multi-criteria decision making (MCDM) approach to calculate indexes based on the technique for order of preference by similarity to an ideal solution, complex proportional assessment, and VlseKriterijuska Optimizacija I Komoromisno Resenje. Results show that country social welfare and success in COVID-19 control negatively affect the perceived utility of the apps. Also, success in COVID-19 control and the perceived utility of food apps positively affect the proportion of unhealthy reviews, whereas social welfare has a negative impact. The results have important implications for public health policymakers, showing that the online food environment can be an important setting for interventions that seek to incentivize healthy eating.

Research on government subsidy strategies for new drug R&D considering spillover effects

This paper studies the pharmaceutical production supply chain system composed of upstream and downstream pharmaceutical enterprises, and explores the impact of government subsidy strategies on the new drug research and development (R&D) decision variables and profits of pharmaceutical enterprises as well as social welfare, when considering both the horizontal spillover effects within the industry and the vertical spillover effects between industries. Comparing and analyzing the impact of these strategies including non-government subsidy strategy, pharmaceutical enterprise innovation input subsidy strategy, pharmaceutical enterprise innovative product subsidy strategy, patient price subsidy strategy, and patient medical insurance subsidy strategy. By establishing a four-stage Cournot duopoly model incorporating spillover effects, the equilibrium solutions are obtained by backward induction, and the impact of spillover effects on decision variables is investigated accordingly. Studies have shown that: (a) Government subsidy strategies can promote pharmaceutical enterprises’ R&D investment and have a positive incentive effect on the pharmaceutical enterprises’ profits and social welfare. (b) The patient medical insurance subsidy strategy is the optimal subsidy strategy, which can generate higher profits for pharmaceutical enterprises and higher social welfare. (c) The horizontal and vertical spillover effects have different effect on decision variables, enterprises’ profits and social welfare under various subsidy strategies.

Transboundary watershed pollution control and product market competition with ecological compensation and emission tax: a dynamic analysis.

Product competition and pollution control are closely related to watershed environmental management, but existing literature rarely investigates them in an identical framework. Therefore, this paper develops a multiple differential game model to analyze product market competition and ecological compensation games between watershed regions based on the assumption that a region can choose four strategies to regulate its manufacturers while cooperating with other regions in the basin. Then, we solve the model and obtain a simultaneous equilibrium between the governments and manufacturers for the first time. The results show that the combination of emissions tax and ecological compensation results in the highest social welfare and water ecology for all regions in a basin. Furthermore, the ecological compensation rate independent of emissions tax policy and ecological compensation does not shift investment from downstream to upstream, but it can induce the upstream region to increase investment in management. In addition, if the governments impose an emissions tax, manufacturers' output in both regions decreases, and the upstream region is higher than in the downstream region.

A Zonal Capacity Market Model With Energy Storage for Transmission and Distribution

Traditional generation and transmission expansion planning has served electric utilities well for several decades to procure the least costing set of assets to meet forecasted demand. Unfortunately, it does not consider a demand curve, in which case it procures generation and transmission assets that do not ensure maximum societal value. An Incremental Capacity Auction (ICA) enables a power system to competitively procure additional generation capacity that maximizes social welfare while satisfying numerous constraints. However, typical ICA designs, zonal or otherwise, do not consider new inter-zonal transmission lines and distributed energy resources (DERs) embedded in distribution systems, promoting suboptimal solutions. To address these shortcomings, this work presents a new comprehensive ICA model that considers intra-zonal and inter-zonal constraints with provision to add new inter-zonal transmission lines and distribution system embedded DERs, while accommodating non-monotonically increasing generator capacity price bids. The proposed zonal ICA model is applied to two systems: (1) a synthetic test system with two zones; and (2) Ontario, Canada’s provincial power system with six zones. The Ontario system study considers a realistic demand growth and demonstrates that the proposed zonal ICA model achieves 5.7% higher social welfare considering new inter-zonal transmission enhancements and DERs over existing single-zone methods.