College of Management and Economics

About: College of Management and Economics is a based out in . It is known for research contribution in the topics: Supply chain & Stock market. The organization has 2184 authors who have published 2193 publications receiving 28830 citations.

Locating emergency facilities with random demand for risk minimization

Abstract: Locating emergency service facilities is a challenging problem. Planners do not know specifically where emergencies will occur and, therefore, struggle to find a location that effectively ensures that the risk of poor service to any specific emergency is minimized. In this paper, we study the problem where locations of each demand point (emergency occurence) are random. Our objective is to minimize the expected maximum rectilinear distance from the facility to the demand points. This problem has practical importance in public sector as it aims to minimize the expected maximum risk when locating an emergency response facility. We start with a one dimensional problem and extend the results to the more complex two dimensional case. We present some properties of the problem along with examples for special cases. We propose a simulation approach to solving complex two dimensional cases and present simulation results for general cases to illustrate the problem and provide insight into solutions. We show that the simulation approach provides solutions very close to optimal for the linear case and suggest that it may provide valuable insight into the location selection system.

The effects of concession period structures on BOT road contracts

Abstract: Under the build-operate-transfer (BOT) approach, the private firm builds and operates a road within the concession period and transfers the project at no cost to the government at the end of the concession period. Based on whether the construction period and the private operation period are defined together or separately, there are two concession period structures: single-period concession structure (SPCS) and two-period concession structure (TPCS). This paper simultaneously compares socially optimal toll prices in both private and public operation periods, road quality, and concession period under SPCS and TPCS, respectively. We find that if the marginal social welfare with respect to toll price in private operation period is sufficiently more responsive than to road quality, then the optimal road capacity and toll prices under SPCS are higher than those under TPCS. Otherwise if marginal social welfare in public operation period is sufficiently more responsive to road quality, then the optimal toll prices under SPCS are lower while the optimal road quality under SPCS is higher. We also find that the optimal concession periods are independent of concession period structures. This paper has made three extensions to further investigate the effects of concession period structures (1) when the toll price is determined by the private firm; (2) when renegotiation takes place; and (3) when government support policies are present. Based on our model results, this paper derives several policy implications regarding BOT road contract design under different concession period structures.

Contracting and renegotiating with a loss-averse private firm in BOT road projects

Abstract: In BOT road project, the government offers a firm an ex ante contract, which specifies toll price and concession period based on the forecasted demand. When the demand states are observed in the operation period, the government may request renegotiation to adapt the initial contract to the realized demand state. By considering the loss aversion behavior of the private firm, this paper shows that renegotiation takes place only if the private firm’s extent of loss aversion is sufficiently small. However, in what direction the government adjusts toll price and concession period depends on the combined effects of initial price, demand level, and demand uncertainty in each demand state. This paper has further investigated the optimal initial contract. We find that if one demand state realizes with a sufficiently large probability, then the optimal initial contract is renegotiation-proof in this demand state while inducing renegotiation in other demand states; if all demand states realize with almost equal probabilities, whether the optimal initial contract prevents or induces renegotiations in all demand states depends on the private firm’s extent of loss aversion. This paper makes two major contributions to the literature. First, we apply loss aversion to the context of renegotiation in BOT road projects and show that renegotiation is costly. Second, we consider the optimal initial contract in anticipation of ex post renegotiation and show that the government should trade off between ex ante social welfare and ex post psychological loss. To obtain more insights and to strengthen our model results, we have reexamined the optimal renegotiation and initial contracts under some relaxed assumptions.