PurposeThe purpose of the study is to numerically investigate the relationship between the increase in transaction cost and prolongation of cooperative period acting as a nonmonetary incentive for municipal PPP projects.Design/methodology/approachA model that combines real option theory and the concept of prospect theory is proposed in the study. Three municipal road PPP projects published by China Public Private Partnerships Center are selected as cases. The data of these cases are analyzed based on the model established.FindingsThe prolongation of the cooperative period affects the increase in transaction cost, which gradually decreases when the prolonged cooperative period increases. Furthermore, the large-investment PPP projects own more transaction cost compared with less-investment projects. The decrease in transaction cost in the former is less than that in the latter. The increase in transaction cost is evidently alleviated in a project with less investment when the cooperative period is prolonged further.Originality/valueThe study systematically analyzes the relationship among transaction cost economics, real option theory and prospect theory and proposes a theoretical flowchart of the effect of nonmonetary incentive on the transaction cost. A model to quantify the effect of nonmonetary incentive (i.e. prolongation of cooperative period) on the transaction cost is proposed for the first time. The results of the study verify that the nonmonetary incentive affects transaction cost.

Governance mechanisms of public–private partnership (PPP) projects can alleviate opportunism behaviours and indirectly reduce transaction costs from the perspective of transaction cost economics. This paper analyses 40 PPP projects in 14 provinces and municipalities across China using the grounded theory and finds that the key attributes for contractual governance are risk sharing, procurement methods, rights allocation and financing mechanisms. The core mechanisms for relational governance are trust in competence, reputation, institutional trust and commitment-related trust. Applying this system in project governance helps enhance project performance.

High technology industry with high risks and high profitability, it is because of these characteristics has attracted a lot of risk investment, the government as the main support of high technology industry, the integrated use of fiscal means such as tax and investment and financing to adjust the relationship between venture investors, venture capital company and venture enterprise. This paper introduces the two-period of partial equilibrium model, and analyses the question that how risk investment policy work on high technology industry with three aspects ranging from tax mechanism of risk investment behavior, mechanism of governmental risk investment policy to venture investors, to the influence of the tax policy for high technology enterprise on risk investment mechanism. And it points out that the governmental taxation type and tax base will affect the risk investors' desire and high technology enterprise cost of capital, which influence the development of the high technology industry.