Based On The Performance Evaluation Mechanism Of The Formation Of Urban Water Supply Enterprises Prices

Water has not been viewed as a commodity, so the long-term implementation of lowwater prices, highly subsidized welfare policy, and the lack of market supply and demandbased mechanism has not only leaded to a waste of water, which ends up with watershortages and pollution, but also brought heavy losses to water supply enterprises.Meanwhile, water shortage is prevalent all over China, and accompanied by theacceleration of urbanization, such shortage is growing worse. Since China’s urban watersupply is generally priced too low, the market-oriented reform will certainly beaccompanied by price increases. China’s relevant laws and regulations being enacted onwater industry reforms, has not only played a strong significant role in market-orientedreforms, but also in promoting the process of market reform. Market-oriented reform,which develops with price as the target and performance evaluation as a means, is the trend,which also becomes the main trend of the development of the water industry.On the basis of the reference price ceiling model, by means of game model, theoptimal performance of water supply enterprises is analyzed in two cases, which are undergovernment regulation and pursuing profit maximization, to determine the level. Thisreveals the strategic behaviors of water supply enterprises, the government and otherstakeholders related to water pricing under the game of subsidies. Meanwhile, this paper,quoting the ideas of the yardstick competition theory, and choosing data envelopmentanalysis as the research method, has built up a mechanism of price of water supply, basedon performance evaluation, which changes the traditional way of bargaining with thegovernment to stimulate the water supply enterprises to improve the production andmanagement efficiency. Related data of18provinces in the urban water supply were DEAanalyzed, with the overall efficiency of its technical efficiency and scale efficiency as aresult. This research finally offers few recommendations to built up a scientific andreasonable water price formation mechanism based on the evaluated performance.