Comparison of royalty methods for build–operate–transfer projects from a negotiation perspective

Chao-Chung Kang, Cheng-Min Feng and Chiu-Yen Kuo

Transportation Research Part E: Logistics and Transportation Review, 2012, vol. 48, issue 4, 830-842

Abstract: This study constructs a royalty negotiation model for the bi-level programming (BLP) problem and develops a heuristic algorithm for solving the BLP problem. Concession rate, learning effect, and the time value discount rate are integrated into the proposed algorithm to reflect an authentic negotiation process. A case study is employed to simulate the negotiation behavior of two parties and alternative royalty strategies are discussed. Analytical results indicate that the two parties acquire the best negotiation result during the fifth negotiation. The operational revenue-based royalty model is more preferred by governments, while concessionaires favor more the operational output-based royalty model.

Keywords: BOT project; Royalty; Negotiation; Bi-level programming (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:transe:v:48:y:2012:i:4:p:830-842

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DOI: 10.1016/j.tre.2011.10.002

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