Game-theoretic models of improvement to water supply security in China

It is urgent to upgrade urban water supply systems to improve water supply security in developing countries. This paper conducts models for analyzing the conflicts between local government and a water company based on game theory. Penalties and subsidies are considered as policy variables to promote water companies upgrading equipments. Then the model is enriched by adding policy variable, reputational damage to local government. The contribution of this study is optimizing the design of water policies.