A Study On The Pricing Decisions About China’s Railway Public Obligation Service And Compensation Mechanisms

National railway administration of People’s Republic of China and China State Railway Group Co.,Ltd.were established as a result of Ministry of Railways reform in 2013 aiming to separate the function between administration management and business operation.The State Council calls for researches into how to establish the subsidiarity mechanism of railway transportation serving for public welfares,subsidiarity methods,and appropriate compensation plan targeting the loss caused by delivering public welfare service,but these should be researched on the foundation of having clearly understood railway operation pricing.Given above context,establishing functional price compensation mechanism and how to establish such mechanism is significant to deepen railway transport reform and progressively sustainable development of railway corporations.To facilitate railways system to separate administration management fundamentally from business operation and create advantageous environment for railways enterprises to attract social capital,this paper examines and proposes the compensation mechanism and methods of railway public welfare transport.It covers four sections.First,theories on public goods and externalities of railways public welfare are reviewed in the context of railway operation.The concept and mechanism of railway public welfare are analysed.Second,current development of public welfare railways delivering and its economic features,and methods suitable to define public welfare provided by railways from the perspective of economics and statistics are analysed.Empirical studies of developed countries and domestic cases are reviewed to provide policy implication and experiences for China’s sustainable development of railway public welfare transportation.New definition,procedure and methods of railway public welfare transportation are proposed on the foundation of identifying the public welfare section and corporation operation section compared to theoretical framework.Thirdly,theoretical analysis and mechanism policy development are adopted as methods to develop methods and models for assisting transport price decision-making.Compensation goals,principles and methods are proposed.Bearing in mind with price compensation development context,long-term goals of railway public welfare,and the main relationships(demand-supply,decision-making priority,and demand distribution)to address,three models of transport pricing decision strategies are proposed for the compensation mechanism and method of railway public welfare transport on the basis of revenue sharing contract,Stackelberg game theory,and demand distribution.The first model is pricing mechanisms designed to tackle challenges for public sectors and transport enterprises to make decisions together of pricing under the condition of transport demand is subject to uniform distribution.In this occasion,the mechanism is established to avoid the price distortion due to the government compensation.The second model is compensation mechanisms designed to tackle challenges for the scenario that enterprises set price first before public sector adapts its public procurement plan to demand distribution.The third model is designed to solve the decision-making problems between public sectors and enterprises when transportation service obeys market demand.The fourth section implements research results in policy practices in China for the decision-making of public sectors.Figure 46,Table 11,and References 137.