Research On Investment Value Assessment Of Highway PPP Projects Based On Real Options And Differential Game Theory

With the broad adoption of the PPP(Public-Private-Partnership)model,the government offers rewards to entice social capital to participate in the building of public infrastructure in an effort to relieve financial strain.Government agencies typically offer traffic volume guarantees,revenue guarantees,and other types of compensation to share the investment risk in order to mitigate the traffic risk of highway projects.Determining the value of the flexibility built into the government’s guarantee approach is crucial for evaluating the investment potential of PPP projects.Also,taking into account the various social capital aims and departmental interests,the game features of both public and private sides have a substantial impact on the investment value of PPP projects.Based on this,this paper examines the investment value of government guarantees and highway PPP projects based on real options and differential game theory.Firstly,this paper takes highway PPP projects as the research object,analyzes the option characteristics of four commonly used guarantee methods using the Black-Scholes pricing model in view of the uncertainty of traffic volume,constructs an option value assessment model for government-guaranteed highway PPP projects,and establishes a framework for the comparison of different guarantee methods from a financial perspective.Secondly,based on the previous study,an investment value assessment model for highway PPP projects with government departments and private investor games is proposed,which improves the existing investment value assessment model by using the Stackelberg differential game model.In order to reconcile the conflicting interests between the government and private investors in PPP projects,the traffic volume subsidy and toll pricing decisions under the public-private game are studied.Thus the option value model of minimum traffic guarantee and excess traffic sharing is further optimized with a view to providing a reference for the decision-making of both public and private parties.Finally,the results of the study show that the minimum traffic volume guarantee and excess traffic volume sharing guarantee are relatively better and can meet the financial expectations of both government departments and private investors.At the same time,the improved traffic volume guarantee value model was calculated to verify the feasibility of incorporating the public-private game into the project investment value study and to explore the impact of changes in parameters such as price sensitivity factor,operating cost factor,and operating quality on the investment value.The research in this paper not only facilitates government departments’ efforts to measure the value of the guarantee provided and helps them formulate reasonable guarantee policies but also provides a reference for social capital to assess the investment value of the project and make reasonable investment decisions.