Analysis of Private Investors Conduct Strategies by Governments Supervising Public-Private Partnership Projects in the New Media Era

The government, investors, and the public have formed a dynamic multi-game relationship on the Public-Private-Partnership (PPP) project, but few studies include them in a system to study their win–win solutions. Firstly, we constructed a tripartite game model of the government, investors, and the public based on evolutionary game theory. Secondly, the evolutionary process of tripartite strategy behaviors was studied with the system dynamics (SD) model. Finally, the impact of changes in key factors on behavior strategies was studied through sensitivity analysis. The results show the following: (1) In the outsourcing of new energy and power construction PPP projects, the three parties will eventually reach the equilibrium state of {government supervision, public participation, investors effort}, the three parties achieve a win–win situation and the project benefits are the highest at this time, and the public participation will play an important role in promoting the smooth outsourcing of PPP projects. (2) The strategic choices of the government, investors, and the public are sensitive to changes in the corresponding exogenous variables. (3) The security factor plays a crucial role in the choice of public strategy. The public’s choice is not only affected by its own income and cost, but also by the amount of compensation promised by the government and the estimated damage caused by the investor.

Section: Introductionmentioning

confidence: 99%

The Evolutionary Game of Stakeholders’ Coordination Mechanism of New Energy Power Construction PPP Project: A China Case

Gao

2020

“…We used the withdrawn project data to investigate which factors led to the initiation of inappropriate PPP projects by local governments. Most of the literature focuses on how microlevel factors, such as contract design, affect the performance of PPP projects [12,13], while only a small number of empirical studies investigate the impact of macrolevel factors on PPP development, especially whether local governments choose to adopt PPP in local infrastructure development. To the best of our knowledge, we provide one of the first empirical insights into local governments' PPP adoption.…”

Section: Introductionmentioning

confidence: 99%

Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Zhang

et al. 2019

Local governments around mainland China initiated over 14,000 public–private partnership (PPP) projects with a total investment of 18 billion RMB in recent years, but nearly half have been withdrawn since the end of 2017, which raised wide concerns about whether PPP can contribute to the sustainable infrastructure development in urban China. In this study, we empirically investigated major factors affecting local governments’ PPP adoption, especially factors that led local governments to initiate inappropriate PPP projects. Based on a unique panel dataset of 286 Chinese cities between 2014 and 2017, the empirical findings suggested that local governments’ financial pressure was the most important factor and cities with higher off-budgetary debts or lower budgetary deficits tended to initiate more PPP projects. PPP projects initiated under off-budgetary burdens were more likely to be inappropriate and subsequently withdrawn. Based on the empirical results, we provide policy suggestions to promote sustainable PPP developments in China.

“…However, the correlation could weaken contract control and adjustment. Wang et al found that the opportunistic behavior of investors influenced by public engagement, government reputation, incentive mechanism, discovery probability of opportunistic behavior, and penalty measures [58]. Since opportunistic behavior is not conducive to the healthy and sustainable partnership of both parties in MSW disposal PPP projects, effective governance mechanisms, such as contracts, are needed to govern investors' opportunistic behavior [59].…”

Section: Literature Reviewmentioning

confidence: 99%

Incentive Mechanism for Municipal Solid Waste Disposal PPP Projects in China

Gui

2020

In municipal solid waste disposal public–private-partnership (PPP) projects, economic benefits, as well as social and ecological benefits, are critical in sustaining sustainability development. However, private investors may make more efforts for economic benefits than for social and ecological benefits out of self-interest. Because the government does not have the same information that the investors have, information asymmetry leads to opportunistic behavior. To solve these problems, principal–agent models were established to analyze the incentive mechanism for encouraging investors to adopt a positive attitude toward both economic benefits and social and ecological benefits, inhibiting investors’ opportunistic behavior. In particular, numerical simulation was carried out to analyze the relationships between related parameters (c1,c2,ct,a,β,k,λ,p). The results show that the investors with higher comprehensive abilities are more willing to make efforts for social and ecological benefits. An increase in incentive and governance intensity would help to encourage investors to make more efforts for project benefits and to lower the level of opportunistic behavior adopted by investors. The complexity of the task and the fuzziness of the perception of effort input results aggravate the uncertainty and risk of the projects due to information asymmetry. Therefore, real-time and positive incentives are important. In order to ensure the social and ecological benefits of a project, performance standards should be set according to the actual situation; investors prefer fixed compensation with lower risk, but fixed compensation does not have incentive effect, and the proportion should not be too high.