Study on the Risk of PPP Projects Based on the Shapley Value of a Cooperative Game

Since the Public-private Partnership (PPP) pattern has been applied in China, risk has become one of the key factors affecting the success of PPP projects. From the perspective of cooperation of each participant, this paper will illustrate the necessity of taking the cooperation strategy via setting the risk function and the characteristic function. In order to show the necessity of the cooperation strategy more directly, this paper will pay attention to the risk which is needed to be shared among the public sector, the private sector and the banks or financial institution, and distribution of the interest which comes from the risk reduction because of the cooperation of each participant by using the Shapley value. At the same time, in order to obtain a stable and win-win cooperation, this paper will also put forward the proposal for the establishment of the contract as an effective constraint mechanism.