BOT projects: Incentives and efficiency

Larry Qiu and Susheng Wang

Journal of Development Economics, 2011, vol. 94, issue 1, 127-138

Abstract: In recent years, governments have been increasingly adopting Build-Operate-Transfer (BOT) contracts for large infrastructure projects. However, BOT contracts have received little attention from economists. The apparent agency problem in BOT projects has never been analyzed. In this paper, we develop a model to examine the incentives, efficiency and regulation in BOT contracts. We show that a BOT contract with a price regulation during the concession period and a license extension after the concession period is capable of achieving full efficiency. Both license extension and price control are observed in many real-world BOT projects. We also investigate the efficiency in such contracts by considering other factors, including time consistency, price ceiling, foreign ownership, and the lack of price regulation.

Keywords: BOT; Infrastructure; Incentives; Monopoly; Regulation; License; policy (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:94:y:2011:i:1:p:127-138

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