Research On The Consistency Between Fairness And Efficiency Based On Equivalent Efficiency Principle

Fairness and efficiency are eternal goals pursued by mankind.Exploring the relationship between fairness and efficiency can help improve social productivity,promote human development,and maintain social stability.Through the qualitative analysis,previous scholars put forward three viewpoints:efficiency priority,fairness priority,and equal emphasis on fairness and efficiency.However,there are few researches on the relationship between fairness and efficiency by using the quantitative analysis.Based on the political ethicist Aristotle's theory of distribution justice,psychologist Adams's equity theory,and economist Selten's theory of an equitable reward combination,the origin and the meaning of fairness formula are discussed in this study.It is worth noting that none of them proved the formula mathematically.Therefore,this research attempts to adopt quantitative analysis method to interpret the mathematical relationship between fairness and efficiency,and explains that the mathematical relationship is not only a research result,but also can be widely applied as an analytical tool from different perspectives.Firstly,from the perspective of the mean and variance of efficiency,the consistency of the three fairness formulas is proved.Then,equivalent efficiency principle is introduced to verify the fact that the fairness formula is consistent with the equivalent efficiency principle.Meanwhile,this study also clarifies the quantitative relationship between fairness and efficiency,and gives an economic explanation of it.Secondly,the supply chain contract is analyzed from a new perspective of the consistency of fairness and efficiency.By summarizing the results of the equivalent efficiency principle to coordinate the secondary supply chain,the correctness of the equivalent efficiency principle to replace the capacity reservation contract is verified.Specifically,the result shows that the equivalent efficiency principle has the same effect as the supply chain contract when they are applied in the supply chain.Thus,it can be concluded that the fairness is implied in the supply chain contract coordination.In other words,when the efficiency of the manufacturer and the retailer are equal to 1,the manufacturer and the retailer can fairly distribute the profits in the supply chain to realize the supply chain coordination.Finally,the cournot model in the oligopoly market is analyzed from a new perspective of the consistency of fairness and efficiency.According to the analysis on the supply chain contract,it is found that the supply chain contract has limitations under some circumstances,which can only be applied in the long-term equilibrium of the perfectly competitive market and the monopolistic competition market.Among the four types of market structures,there is no fairness in the complete monopoly market,while the equivalent efficiency principle can be applied to the cournot model and the supply chain based on this model in the oligopoly market.The conclusion is that there are respective Nash equilibrium points in these two models which achieve the unity of fairness,efficiency and equilibrium.