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Typically, governments subcontract the operation of urban bus systems to several bus operators. In particular, the government aims to promote the service quality for passengers by introducing competition among bus operators and subsidizes bus operations to ensure affordable fares. However, most existing studies about subsidy allocation typically do not account for the competitive factors among bus operators and thus may underestimate the associated benefits. In this study, we investigate how the government allocates subsidies to minimize social costs, taking into account the competition among bus operators and passenger route decisions. We describe this problem as a trilevel optimization model and use a game-theoretic approach to characterize the market equilibrium of bus operators. Next, we transform the trilevel model into a mixed-integer programming problem with quadratic constraints and solve it using an exact algorithm with acceleration techniques. The results of numerical experiments demonstrate the computational efficiency of the proposed algorithm. Several valuable insights are derived: First, lines served by competing bus operators typically do not require subsidies. Second, competitive behavior decreases social costs (including bus operating costs and passenger travel costs) more effectively in cities in which the passengers assign higher value to time. Third, the competitive behavior may be guided by exogenous parameters, such as ticket prices, to approximate the optimum of urban bus systems. Funding: This work was supported by the Key Project [Grant 52131203], Youth Program [Grant 72301065], and Project of International Cooperation and Exchanges [Grant 72361137006] of the National Natural Science Foundation of China. [ABSTRACT FROM AUTHOR]

We outline a model of endogenous choices of market entry and product scope in a partial-equilibrium model of heterogeneous firms with arbitrary productivity. Firms' choices of interest depend on market characteristics including variable trade and fixed market-entry costs. Conditional on fixed costs, the extent to which firms respond to shocks depends on their (potentially nonparametric) density around the zero-profit threshold. Accordingly, identical changes in, e.g., variable trade costs per product and market can lead to vastly different responses across not only markets and products but also firms. We shed light on the heterogeneity of these responses by estimating parameters and otherwise calibrating the model to firm-and-product-level bilateral trade data for China. [ABSTRACT FROM AUTHOR]

At present, China's civil aviation industry is in a period of rapid development. The passenger traffic is increasing year by year. The contradiction between the demand and supply of flight resources is becoming more and more prominent, and the competition between airports is becoming more and more fierce. Driven by local development and the country's overall planning, there are more and more multiairport areas, so how to analyze the airport market competition in multiairport areas needs to be further realized. This paper constructs a two-dimensional Hotelling model based on flight frequency and passenger travel cost to analyze the internal mechanism of market competition among multiple airports. It is assumed that, in a multiairport area, two airports are distributed at both ends of a linear straight line, and the other airport is in between, and each airport provides displacement services connecting the same destination airport. The research shows that, (1) with the increase of the flight frequency of the airports at both ends, its equilibrium profit shows a trend of decreasing first and then increasing; the difference of the flight frequencies of the airports at both ends affects the equilibrium profit of the middle airport. (2) With the gradual increase of flight frequency, the reduction of passenger travel cost will make the equilibrium market share and equilibrium profit show a trend of first decreasing and then increasing. (3) Taking the Yangtze River Delta regional airport as an example, it is found after verification that increasing flight frequency or reducing passenger travel costs can increase the balanced profit and market share of Hangzhou Xiaoshan Airport and Nanjing Lukou Airport; increasing flight frequency can improve the balanced profit and balanced market share of Sunan Shuofang Airport. [ABSTRACT FROM AUTHOR]

Equilibrium capacity expansion is an effective tool to help regulators predict the generation evolution of power systems by analyzing the decision-making of generation companies (Gencos). With the development of carbon markets (CMs) and electricity markets (EMs), Gencos' decisions in these two markets (encompassing investment and bidding decisions related to carbon emission allowances and electricity) are deeply intertwined through market clearing results. However, existing studies mainly focus on equilibrium capacity expansion with fixed carbon prices and usually ignore the realistic clearing process of CMs, which cannot simulate Gencos' coupled decision-making and accurately predict generation evolution under the CMs and EMs. This paper proposes a two-level equilibrium capacity expansion model for power systems which considers the coupled decisions of Gencos between CMs and EMs. At the upper level, multiple Gencos' coupled decision models are proposed based on their interaction with market clearing results. At the lower levels, CMs and EMs are respectively cleared to determine the varying carbon and electricity prices. Furthermore, the developed equilibrium capacity expansion model is reformulated as an equilibrium problem with equilibrium constraints (EPEC), which is solved by a diagonalization-based solution procedure. Finally, a provincial power system of southeast China is used to validate the performance of the proposed framework. The results illustrate that under CMs and EMs, non-fossil energy would account for 81.3% of total capacity and 73.88% of total generation in 2050. Compared to the existing model using fixed carbon prices, the consideration of realistic carbon market clearing will promote the installation of renewable energies and improve social welfare. The proposed model can provide beneficial references for regulators to perceive the evolution of power systems in CMs and EMs. • A two-level equilibrium capacity expansion model for power systems is proposed. • A novel coupled decision model for Gencos in CMs and EMs is developed. • The proposed model is solved by a diagonalization based solution procedure. • The results can guide the transition of power systems under the CMs and EMs. [ABSTRACT FROM AUTHOR]

At present, China and some other countries and regions are adopting both electricity and carbon trading markets to optimize the resource allocation of the power industry. The aim of this research is to explain the production behaviors of fossil fuel power enterprises in these complex dual market conditions and then evaluate the market effects. On the basis of the real market rules of China and the production characteristics of these enterprises, we describe the production decision process of enterprises with different market positions (leader, follower, and taker), obtain their optimal yield, and then offer market equilibrium results (total electricity supply, clearing price, total CO 2 emissions, and carbon intensity level). Besides, we evaluate the impacts of government interventions (market condition changes) on regional market equilibrium situations by numerical simulation. Our results indicate that the direction (positive or negative) of the above impacts is determined by the level of the allocation coefficients of the carbon emission quota, and the degree of these impacts is determined by the level of fine for unit excess carbon emissions. Moreover, our research also proves that enterprise collusion behaviors aggravate market failure but lower the carbon intensity level. • Fossil fuel power enterprises in China are facing complex dual market conditions. • We describe the production decision process of enterprises with different market positions. • We offer the equilibrium results of electricity and carbon trading markets. • We evaluate the impacts of government interventions and enterprise collusion behaviors. [ABSTRACT FROM AUTHOR]

• Present a model of competition between river and sea carriers and a model of carrier alliance via revenue-sharing agreement. • Analyze the properties of market equilibria under carrier competition and collaboration. • Ascertain the effects of the sailing distance of seagoing ships in sea segment and the transshipment time cost of cargos at transfer port. • Conduct a case study of major inland river ports along the Yangtze River China. This paper investigates the market dynamics and welfare implications when river and sea carriers may compete and collaborate in an inland river market. A vertical-structure model that considers the interactions among ports, river and sea carriers, and shippers is proposed. The port operator sets port service charges to maximize social welfare of the river-sea transport system. The sea carrier maximizes own profit by determining the inland river ports to collaborate and the waterway freight rates for the river-sea and seagoing transport services. The river carrier maximizes own profit by determining its waterway freight rates for the inland river transport services and the revenue that it shares with the sea carrier. Two cases are considered: (i) the competition case in which the river and sea carriers compete with each other; and (ii) the alliance case in which the river and sea carriers share revenue with each other. The results suggest that there are markets where the alliance between river and sea carriers can make both of them better off (i.e., win–win outcome), which also increases the social welfare of the system. However, port charges may need to be adjusted to balance carriers' pricing, although the waterway freight rates paid by shippers may not be changed. Due to waterway depth limitation, the win–win outcome tends to be more difficult to achieve in upstream ports with more shallow waterways, whereas increased transfer time at transfer ports favors direct sea-river shipping services. The river and sea carrier alliance has potential to benefit the shipping industry and the public. However, such an alliance may not be feasible to form for all inland ports, and government intervention on port service charge may be justified. [ABSTRACT FROM AUTHOR]

The reliability option (RO) ensures generation capacity adequacy, drawing inspiration from financial product options. However, most recent RO studies overlook the gaming strategies employed by power producers. This paper proposes a bi-level model based on an equilibrium analysis of the power market under RO. The upper-level model aims to maximize the power producers' profit, whereas the lower-level model focuses on market clearing. Profit calculation considers factors like electricity sales income, option fees income, fuel cost, expansion investment cost, refund cost, and penalties. The bi-level model is reformulated into a mathematical problem with equilibrium constraints (MPEC) for each producer using Karush–Kuhn–Tucker conditions of the lower-level model. We then apply a series of linearization methods. The market equilibrium is obtained through the dynamic game framework for all MPECs. We also provide a comprehensive purchase cost calculation and demonstrate its equivalence to user side surplus. We examine cases from various spot market construction maturities in a provincial area of China. Our results indicate that implementing the RO mechanism and aligning parameters with the proposed optimal RO parameter curve, one can reduce the comprehensive purchase cost. • Various strategies of all power producers are considered. • The MPEC under RO mechanism is precisely linearized to MILP. • Dynamic game framework is used to solve market equilibrium to be more practical. • RO mechanism can increase the user side surplus according to the equilibrium. • The optimal RO parameter curve is obtained as the parameter setting suggestion. [ABSTRACT FROM AUTHOR]

The consolidation of natural gas pipelines and the implementation of Third-Party Access (TPA) are two critical conditions of gas market liberalization that are being implemented in China, but their full impacts are insufficiently understood. This study employs a natural gas market equilibrium model to explore the utilization rate and congestion cost of China's long-distance pipelines, considering the economic properties of the pipelines. Except for the producer and the ending consumer, we envision the trader as a new agent based on the implementation of the TPA and improve the marketing behaviors of independent pipeline and storage operator agents covered in previous studies by adding independent transportation service and seasonal arbitrage. The results show that while the total utilization rate of long-distance pipelines is 87%, many pipeline segments are congested, which suggests that China's long-distance pipeline network has the potential for optimization. By introducing the congestion fee, this study identifies the pipelines that need structural optimization and capacity expansion. The results of this paper suggest that optimizing existing pipeline networks, deepening market liberalization, and developing a functional storage sector should be prioritized in China's gas market development. • An improved equilibrium model of China's natural gas market is developed. • Traders are designed to participate in the gas market based on TPA. • The long-distance pipeline network is studied as a whole from a national perspective. • Each pipeline is divided into several segments and depicted by congestion fee. [ABSTRACT FROM AUTHOR]