Research On The Design Of Demand Guarantees For Toll Road PPP Projects

In recent years,in order to alleviate the financial burden,the government has cooperated with social capital to provide toll road projects by frequently adopting PPP model.In toll road PPP projects,the government selects project companies comprised of social capital through competitive bidding,which have the ability of investment and operating management,and renders them a franchise right.The project company is responsible for the construction of toll road PPP project.Under the franchise right,the government allows the project company to charge a reasonable toll to recover upfront construction costs and obtain a certain return on investment during the operating period.However,due to longer construction period and greater upfront investments,the project company faces many operational risks,one of which is the demand risk.Therefore,in order to attract project companies to participate in the construction and operating of toll road PPP projects,the government always provides demand guarantees in a prior agreement to reduce the demand risk faced by project companies.By considering toll road PPP projects as research objectives,this dissertation focuses on the issues of demand guarantee design and its effect on the decision-making of participants in the presence of the scant demand.The main research conclusions can be summarized as follows.Since the ex ante demand forecast is too optimistic in most toll road PPP projects,the phenomenon that project companies suffer from serious revenue losses in the absence of government support often occurs.Therefore,based on the assumption that traffic demand follows a binomial distribution during the operating period,this dissertation first provides a demand forecast process by adopting the Monte Carlo simulation method.Moreover,the minimum demand guarantee(MDG)model is formulated by combining the net present value(NPV)method from the viewpoint of demand forecast.The optimal guarantee level is determined when the quantity demanded is scant by using a numerical analysis,and the adjustment mechanism that the government sets an optimal guarantee level is put forward when the actual quantity demanded deviates from the forecasted quantity demanded.Secondly,by introducing the "reward and punishment" mechanism set by the government into the framework of demand guarantee,this dissertation investigates the incentive effect issue under the MDG.The evolutionary game model is formulated by partitioning the strategic choice between the government and the project company during the operating period of toll road PPP project.Based on this model,the unilateral evolutionarily stable strategy and evolutionarily stable strategies of game system are derived,and the impacts of adjusting exogenous parameters on evolutionarily stable strategy are discussed.It is found that the government is inclined to carry out the strategy of "reward and punishment"and the project company is inclined to select the strategy of "high effort" when there exists a high guarantee level and a great punishment amount,which prevents the opportunistic behavior of project company.However,the project company is inclined to select the strategy of "low effort" when the government provides a great reward amount.Thirdly,to maximize social welfare as a decision-making objective,this dissertation formulates the optimization models of both MDG and flexible demand guarantee(FDG)by making guarantee level endogenous,and analyzes the optimal decision-making issue of government in the scenario of information symmetry and information asymmetry.By solving the formulated optimization model,the optimal tolls,guarantee levels and effort levels of project company under two types of demand guarantees are obtained.A numerical analysis is carried out to compare and analyze the obtained optimal results.It is found that if the information is symmetrical,the socially optimal tolls under two types of demand guarantees are equal,and there is the higher socially optimal guarantee level and effort level of project company under the FDG.However,if the information is asymmetrical,there is the higher toll,guarantee level and social welfare under the FDG in the presence of a small threshold coefficient.Finally,in order to investigate the compatibility issues between the exclusivity guarantee frequently used in toll road PPP projects and the MDG,this dissertation formulates the multi-objective programming models based on different decision-making objectives of government and project companies,and obtains Pareto-optimal tolls,monopoly powers and social welfare that can achieve the balance of interest for participants.It is concluded that for any given government guarantee,the pareto-optimal toll lies in between the toll set by project companies and the socially optimal toll.Moreover,the Pareto-optimal toll is higher and monopoly power is stronger under the MDG if the relative negotiating power of project companies is sufficiently large.In addition,both Pareto-optimal profits of project companies and social welfare are dependent upon the relative negotiating power,unit subsidy,marginal social cost,guarantee level and so on.If guarantee level and unit subsidy are sufficiently high,the government should provide the exclusivity guarantee instead of the MDG.Based on the obtained research conclusions,this dissertation also shows the corresponding managerial implications at the end of each chapter,which provides theoretical guidance for the design of government guarantee policy in toll road PPP projects.Finally,both research shortcomings and further research directions are listed at the end of this dissertation.