Research On Government Commitment Of Incentive Contracts For PPP Project

Since the Chinese economic reform and opening up, with the development of social economy, China's urbanization process and urban development has been greatly promoted, the scale of infrastructure rapidly expand. Because of the progress of the construction of urban infrastructure can't meet the acceleration of the urbanization process, the problem of insufficient investment in the field of infrastructure begins to appear in China. At this time, as a kind of practice in many countries and has been proved to be an effective way of public and private capital cooperation, PPP mode has aroused great concern in China, and gradually applied to water, transportation and other infrastructure construction. In our country, PPP mode's application eases the shortage of government funds and makes up for the low efficiency of government management. It also facilitates the use of private capital and professional management skills, and provides higher service efficiency at the same time. Also it improves the quality of the final product, and reduces the burden of public service by means of the competition of the market. PPP has gradually become an important way of infrastructure financing, so it is important to study the related problems of PPP project.In the practical application of the PPP project, the major problem is the government's commitment to investors. If the government does not comply with the commitment, the investors'capital and income will not be effectively guaranteed, the opportunity for the social capital to participate in public projects will be reduced, and social welfare will be lost. Therefore, the form of the government's commitment seriously restrict the establishment of PPP project contract and the construction and management of the project, and also have a profound impact on the government and private enterprises follow-up behavior.When the government's commitment is effective and therefore get the trust of investors, the first sign of the contract usually can be executed. But if there is the possibility of negotiations, the government can also negotiate with investors. While the government has no commitment, the cooperation between the two sides depends on a series of short-term contracts to achieve. If the government does not comply with the conditions of the commitment, the follow-up contract negotiations and implementation will be affected. Therefore, the government's commitment need to be specifically analysis and classify, and it is essential to study the implementation of the contract under the influence of the government's commitment to each type, and this is more benefit for the government to control the contract and corporation in the long period.This paper is written from the perspective of government commitment under the framework of PPP incentive contract, discusses different types of government commitments under the contract situation and the possible behavior of private enterprises to sum up and analysis, and put forward the government regulation scheme. The main research contents of this paper are as follows:First of all, the government's commitment in the cross-term control can be divided into three types:pure commitment, commitment and re-negotiation and commitment. Pure commitment is a commitment that the government and businesses are able to keep their long-term contracts, they will not question the terms of the contract, the original contract will be executed over time. Commitment and re-negotiation is a form between the commitment and no commitment. In this case, government and enterprises can sign a long-term contract, if any party desires to execute the contract, the contract will be executed; but the two sides can still be in the condition of mutual benefit, through negotiation and re-negotiation to modify the original standard, and then establish a new contract. No-commitment is that the government and enterprises can only sign short-term contract, the relationship between the two sides is adjusted by a series of short-term contracts.In the third chapter, under the condition of the government's pure commitment, it is assumed that in every period, the enterprise completes one project, and the only variable quantity that can be observed by the enterprise and the government is the actual cost of the period. In this case, a detailed analysis of the basic model and the relationship of the multi-period is carried out, and the basic rules of the optimal static contract are obtained. Since the re-negotiation will generate a large amount of cost and benefit the social welfare, so this chapter from the perspective of maintaining pure commitment contract, according to the size of the second phase of the high efficiency and the low efficiency of the enterprise in the post belief efforts to negative utility relationship, put forward three kinds of regulatory contracts to prevent the re-negotiation of the second phrase, for the government to maintain the long-term commitment of PPP incentive contracts.In the fourth chapter, through the analysis of the enterprises' efforts and social welfare under the condition of the static explicit contract, and comparing with the social optimum standard, the incentive problem of the PPP incentive contract is found. By establishing two kinds of dynamic implicit contracts, the cost of re-negotiation and the loss of net surplus are reduced, and the government's income is improved, the best effort level of the enterprise society is kept, and the improvement of the mechanism of PPP incentive contract is realized.In the fifth chapter, under the condition of the government no-commitment, the chapter considers the situation of the government to design the incentive contract for a single enterprise, and assumes that the information is symmetrical. From the investment analysis, it finds out the problem of insufficient investment in enterprises, and in the case of the involvement of the business and the lack of participation constraints, by the government in the investment phase of the cost compensation method for enterprises to encourage enterprises to increase investment. At the same time, the government's planning is analyzed and solved, the optimal plan is obtained, which can solve the problem of insufficient investment.