BOT contracts : incentives and efficiency

Larry D. QIU, Susheng WANG*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

30 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)127-138
Number of pages12
JournalJournal of Development of Economics
Volume94
Issue number1
Early online date29 Nov 2009
DOIs
Publication statusPublished - Jan 2011
Externally publishedYes

Fingerprint

incentive
efficiency
concession
regulation
license
time factor
economist
ownership
infrastructure
contract
Incentive contracts
price
lack
project
Concession
Price regulation
License

Keywords

  • BOT
  • License policy
  • Infrastructure
  • Incentives
  • Monopoly
  • Regulation

Cite this

QIU, Larry D. ; WANG, Susheng. / BOT contracts : incentives and efficiency. In: Journal of Development of Economics. 2011 ; Vol. 94, No. 1. pp. 127-138.
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BOT contracts : incentives and efficiency. / QIU, Larry D.; WANG, Susheng.

In: Journal of Development of Economics, Vol. 94, No. 1, 01.2011, p. 127-138.

Research output: Journal PublicationsJournal Article (refereed)

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