Research On The Balance Of Risks And Benefits In Public Projecs By BOT

In recent years,with the development of China's urbanization,the need for public infrastructure increased rapidly.However,compare with the great demand for public infrastructure,investment in infrastructure is becoming increasingly prominent.The local government can't afford the substantial funds required for infrastructure construction independently,attracting investments from foreign investors and private sectors is an effective way to relieve the government from the short of funds.But,the infrastructure always needs amount of invest,while the payback period nearly account more than half of the operation,what's more,the risks are uncertain for private sectors,consider for these reasons,the private units are unwilling to bear the huge investment risk.In this paper,we try to establish an combine of the guarantee from the government to insure the private units can achieve a certain level of income in any environment,and a restrictions level of income to avoid the private units getting excess returns.Firstly,this paper reviewed the theory of diversification risks about project by BOT,distribution of incomplete contract theory and the theory of surplus,introduce the importance of the establishing the decision model about the balance between risks and benefits in public project.We analysis the minimum income guarantee and the highest income restrictions from the government has the characteristics of compound options,proposed the combination of assurance and revenue sharing programs,and making reference to the proposed scheme.This paper also provides a method to calculate the potential cost of government under the combination of assurance and revenue sharing,we analysis the potential costs of the government,earnings of private units under kinds of combination of assurance and revenue sharing programs in a specific case,we make it clear that the combination of assurance and revenue sharing programs are effective,and finally made effective decisions based on our assumptions.This paper provide both the government and the private units a way for their decision-making in public projects by BOT.