Differential Game Analysis of Government-Enterprise Procurement Strategy under Public Health Emergencies
For the past twenty years,the world has experienced significant public health emergencies such as SARS(2003),H1N1(2009),MERS(2012),Ebola(2014),Zika(2016),and COVID-19(2019),which have seriously endangered human life and health safety.To address the explosive growth in the demand for emer-gency supplies following these outbreaks,governments typically adopt two approaches;the first approach involves pre-stocking some emergency supplies,which incurs inventory costs for the government in the absence of an epidemic;the second approach involves directly participating in the spot market to purchase emergency supplies,which can lead to soaring prices and dramatically increased procurement costs when a public health emergency occurs.Unlike existing literature,which primarily focuses on pre-event joint procurement or stockpiling by govern-ments and enterprises,this paper focuses on the procurement strategies for emergency supplies by governments and enterprises during public health emergencies.It explores how the government can gather as many emergency supplies as possible and how enterprises can produce them in substantial quantities.Furthermore,by examining the procurement strategies of governments and enterprises under different conditions,this study analyzes the factors influencing their strategic choices,thereby enhancing the specificity and effectiveness of government procurement strategies and regulatory actions.Based on the content above,we focus on developing and applying differential game theory to analyze procurement strategies between governments and enterprises during public health emergencies.This approach integrates multiple variables such as taxation,market prices,and the number of enterprises to construct a differ-ential game model that analyzes the profits of governments and enterprises in both non-cooperative and collabora-tive scenarios.The model aims to determine equilibrium strategies that optimize outcomes for both government and enterprises under various conditions.Through this methodological framework,the paper investigates how strategic adjustments in government procurement policies and enterprise production capabilities can effectively meet the urgent demand for emergency supplies,thereby enhancing crisis management and response effectiveness.The results indicate that after public health emergencies occur,compared to non-cooperative strategies between governments and enterprises,the government’s choice to collaborate with enterprises can enhance its efforts in managing the emergency.The decision of enterprises to opt for a cooperative strategy is influenced by several factors:(1)An increase inemergency supplies’market prices may prompt enterprises to choose non-cooperative strategies.Therefore,the government should not only raise its procurement prices but also regulate emergency supply market prices at a macro level.(2)An increase in the number of enterprises producing emer-gency supplies does not necessarily mean an increase in production capacity,because these enterprises may engage in malicious competition to secure higher profits and limited raw materials for emergency supplies.Production capacity can only be improved when the number of enterprises that choose to cooperate with the gov-ernment increases;otherwise,it might lead to a decrease in production capacity.(3)Raising tax coefficients and government procurement prices can incentivize enterprises to adopt cooperative strategies.Therefore,following the outbreak,the government should implement appropriate fiscal measures to encourage enterprises to choose coopera-tive strategies.It is worth noting that this paper does not consider the condition for government subsidies on production costs to enterprises producing emergency supplies,nor does it account for enterprise actions such as donating or selling emergency supplies at low prices due to social responsibility following a public health emergency outbreak.Future research will address these aspects to optimize the existing model further.
public health emergenciesemergency supplies demandprocurement strategydifferential game
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