| Urban water utilities were one of the most important infrastructure industries in the national economy and were important guarantee to maintain the sustainable development and coordinate the dynamic relationship among social, production and ecological and also were important component to speed up urbanization. Since the end of2002, China began to establish the franchise as a market-oriented reform of urban water utilities and urban water utilities had a rapid development. But in the process of franchising, franchise auction mechanism was missing and unsound, which deviated from the target of urban water utilities projects and social welfare maximization. Therefore, it was an important issue to build optimal franchise auction mechanism combining the characteristics and objectives of the reform of urban water utilities projects. At the same time, it was the objective requirements of promoting the rapid development of urban water utilities, adapting to urbanization and the residents’needs.Based on the technical and economic characteristics of the urban water utilities and in-depth analysis of the present situation and problems of franchise of the urban water utilities, this paper selected BOT projects, TOT projects and commissioned operational projects as research object. This paper built respectively participation constraint and incentive compatibility constraint conditions of maximizing the social welfare issues to solve the franchise auction mechanism and prove the effectiveness of the mechanism. At the same time, this paper analyzed a typical case of urban water utilities and summarized the main problems in the process of franchising. Designing franchise auction mechanism provided important guidance for different projects to select the franchise auction mechanism, while improving and complementing the existing urban water utilities franchise auction mechanism. Therefore, the analysis had important theoretical and practical significance.In this paper, the researches were as follows:1. To analyze the objective needs and the basic status of franchise in the urban water utilities.From the drawbacks of the traditional administrative grant system, the paper released the practical needs of implementing the franchise system based on analysis of technical-economic characteristics of the urban water utilities supply. Meanwhile, on the basis of the analysis of nearly20years franchise project in China urban water utilities, the paper summed up the three-phase characteristics of franchise in urban water utilities and analyzed the lower legal status, normative, and lack of government regulation on franchise business of urban water utilities. Ultimately, the franchise auction mechanism was missing or was not perfect, which resulted a number of sub-optimal or inefficient enterprises to enter the urban water utilities sector, and reduced the operational efficiency and service levels of the urban water utilities industry, which became the real problems to be solved in the process of franchising of urban water utilities.2. To design the franchise auction mechanism of BOT projects in urban water utilities.The urban water utilities were mainly related to water supply and sewage treatment industry. Because different parts of BOT project in urban water utilities were different, based on this, this section constructed franchise auction mechanism and solved the participation constraint and incentive compatibility constraint of optimal social welfare, and verified the effectiveness of the mechanism in the bid quality and licensed operating period, and the bids and the licensed operating period. The choice of franchise auction mechanism on BOT projects abided by the following principles:For determining the price of new projects, you can be bid by selecting the quality and franchise operation of the mechanism to determine the ownership of franchise; for determining the lowest quality attributes of new projects, you can choose the price bid and the licensed operation period to achieve the optimal allocation of the franchise.3. To design the franchise auction mechanism of TOT projects in urban water utilities.Considering the heterogeneity and the differences of projects between water supply in urban water utilities and wastewater treatment industry, the paper gave full consideration to the participation constraint and incentive compatibility constraints of the bidding companies based on the objective of maximizing social welfare and constructed two mechanisms of the bid quality and transfer prices to resolve the ownership of franchise of the TOT projects of urban water utilities. For the TOT project, which has been determined the unit price of urban water utilities supply, bidding the quality and transferring price mechanism can determine the attribution of a franchise; for the TOT projects, which has not been determined the unit price of urban water utilities supply, determined by the price of urban water utilities supply, can be determined the attribution of franchise bids on the basis of providing bidders and the minimum quality of service enterprises and projects.4. To design the franchise auction mechanism of commissioned operational projects in urban water utilities.Considering the different characteristics of the project and the differences of urban water utilities industry, this section for the commissioned operational projects designed to bid for quality, as well as the bids of franchise auction mechanism. Both mechanisms were able to inspire auction companies to disclose the true costs of information and show its efficiency type, which can achieve the goal that the franchise of commissioned operational projects will be assigned to the most efficient enterprises. For the commissioned operational projects of the urban water utilities, which the unit price of services was determined before the franchise auction, can determine the ownership of franchise through bidding the quality. The price can not be as important variables; on the contrary, for the commissioned operational projects of the urban water utilities, which the unit price of services was not determined, can determine the ownership of franchise through bidding unit price of services under the premise of stipulating the minimum auction business conditions and service standards.Relative to the existing research results, the incremental contribution of this article is as follows:First, to analyze the inefficiency reasons of franchise project of some urban water utilities.Franchise auction for the administrative grant system has more advantages, but the reality selected a franchise business by inviting bidders and administrative grant, namely the lack of the auction process, or the franchise auction mechanism ignored the licensed operation period as well as some key variables on the franchising business efficiency. In addition, Franchise auction mechanism was missing or not perfect, and also there was a certain moral hazard and adverse selection in the auction as well as project implementation process. To sum up, the inefficiency reasons of franchise project of some urban water utilities were not yet applied the franchise auction mechanism or the auction mechanism is missing or unsound.Second, to build the six franchise auction model of urban water utilities fewer than three franchise mode.This paper selected BOT projects, TOT projects, and commissioned operational projects on the basis of the characteristics of the town water, and respectively build the bid quality and the licensed operating period, the bid and the licensed operating period of the franchise auction mechanism of BOT projects; the bid quality, transfer prices and the bid of TOT projects; and the bid and bid quality of commissioned operational projects in the urban water utilities based on auction theory and mechanism theory.Meanwhile,verified the validity of the different mechanisms in an attempt to provide an important theoretical support for different projects and different modes of franchise auction.Third, to optimize the choice principles on franchise business in the traditional auction theory franchise.As early as1968, Demsetz propose a principle of choosing the optional franchise businesses. That is, to meet certain quality standards in accordance with the principle of the lowest-cost. Because there were some differences between the actual project and the economic theory, and thus only the lowest cost as an alternative basis was unfair, such as franchise auction of BOT project in the urban water utilities also decided the licensed operation period, quality attributes prices or costs simultaneously. In addition, the price of some projects have been identified and selected franchise companies based on the highest quality, the choice principles of franchise companies proposed by Demsetz (1968) had some limitations. To this end, this section took into account the heterogeneity of the project and optimized the choice principles of franchise business in the traditional franchise auction theory so that the design of the franchise auction mechanism was more in line with reality, and achieve the most efficient enterprise to get the goal of the franchise. |
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