Journal
TRANSPORTATION RESEARCH PART A-POLICY AND PRACTICE
Volume 125, Issue -, Pages 20-34Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.tra.2019.05.006
Keywords
PPP project; Minimum revenue guarantee; Incentive mechanism; Game theory
Funding
- National Natural Science Foundation of China [71571149]
- Outstanding Young Scientific Research Talents Project of Fujian Agriculture and Forestry University [xjq201823]
Ask authors/readers for more resources
Mechanisms for risk sharing are critical in infrastructure project financing. In public-private partnerships (PPP) for highway projects, provision of guarantees by the government to the investors is an important risk-sharing scheme. Because the government does not have the same information that private investors have, information asymmetry leads to speculation. In this paper, investors grab minimum revenue guarantee by deliberately reducing in earnings is identified as a moral hazard. To solve this problem, a game theory model for studying mechanisms that encourage/incentivize investors to adopt a positive attitude toward cooperation with the government is established. In particular, we design incentive mechanisms that engage private investors based on their profitability outlook. The results show that blindly increasing the amount of a reward or a penalty is not an effective way to guide an investor's behavior. Adopting flexible incentive mechanisms during different stages of a project proves effective in influencing investors' willingness to cooperate with the government as well as in maximizing the benefits they realize from the project.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available