Study on Auction Mechanism Design of Urban Recycled Water Franchise and Water Pricing

To solve the problems of funds shortage and low efficiency in China's recycled water industry, the application and extension of franchise operations are necessary. Based on the properties of recycled water industry and the auction theory, this paper designed an auction mechanism of divisible franchise and studied recycled water pricing on the mechanism. The core of the mechanism is the auction rule that bidders whose tender water prices are relatively lower will win the franchise until the accumulative yields exceed the planned total amounts. Afterward, the paper analyzed the influencing factors of price at which a project company sales water to a government agency, and it provided the pricing methods by which the government agency sales to customers. The auction mechanism of franchise will make full advantages of raising funds scattered in society and optimizing the distribution of resources in China's recycled water industry.