z-logo
Premium
A Two‐Phase Model for Trade Matching and Price Setting in Double Auction Water Markets
Author(s) -
Xu Tingting,
Zheng Hang,
Zhao Jianshi,
Liu Yicheng,
Tang Pingzhong,
Yang Y. C. Ethan,
Wang Zhongjing
Publication year - 2018
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1002/2017wr021231
Subject(s) - balance (ability) , matching (statistics) , phase (matter) , variance (accounting) , function (biology) , microeconomics , welfare , china , environmental economics , social welfare , economics , computer science , business , mathematics , statistics , market economy , medicine , chemistry , accounting , organic chemistry , evolutionary biology , political science , law , physical medicine and rehabilitation , biology
Delivery in water markets is generally operated by agencies through channel systems, which imposes physical and institutional market constraints. Many water markets allow water users to post selling and buying requests on a board. However, water users may not be able to choose efficiently when the information (including the constraints) becomes complex. This study proposes an innovative two‐phase model to address this problem based on practical experience in China. The first phase seeks and determines the optimal assignment that maximizes the incremental improvement of the system's social welfare according to the bids and asks in the water market. The second phase sets appropriate prices under constraints. Applying this model to China's Xiying Irrigation District shows that it can improve social welfare more than the current “pool exchange” method can. Within the second phase, we evaluate three objective functions (minimum variance, threshold‐based balance, and two‐sided balance), which represent different managerial goals. The threshold‐based balance function should be preferred by most users, while the two‐sided balance should be preferred by players who post extreme prices.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here