Model for Financial Renegotiation in Public-Private Partnership Projects and Its Policy Implications: Game Theoretic View
Publication: Journal of Construction Engineering and Management
Volume 132, Issue 7
Abstract
Today, government is no longer considered the sole provider of public works or services. Public-private partnership (PPP) has been recognized as an important approach to solving problems for governments in providing infrastructure systems. However, the joint ownership or partnership in PPP complicates the administration of PPP projects. Too often, in PPP, many serious problems occur mainly because of bad administration policies. In particular, the fact that government may rescue a distressed project and renegotiate with the developer causes major problems in project procurement and management. This paper aims to study when and how government will rescue a distressed project and what impacts government’s rescue behavior has on project procurement and management. A game-theory based model for government rescue dynamics is developed. Propositions, corollaries, and important policy implications are then derived from the model. This pilot study, the writer hopes, may provide theoretic foundations to policy makers for prescribing effective PPP procurement and management policies and for examining the quality of PPP policies. The study can also offer researchers a framework and a methodology to understand the behavioral dynamics of the parties in PPP.
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Acknowledgment
The work presented in this paper was supported by the National Science Council of TAIWAN, Grant No. NSC93-2211-E-002-058.
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© 2006 ASCE.
History
Received: Sep 17, 2004
Accepted: Jan 12, 2006
Published online: Jul 1, 2006
Published in print: Jul 2006
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