Study On Incentive Path And Mechanism Design For PPP Project Based On Principal Agent Theory

This paper analyzed the incentive mechanism between government and social capital in PPP project based on the fact of imperfect incentive problem and unfair benefit in the development of PPP project in Chinese.First,this paper studied the principal agent relationships in PPP project qualitatively,distinguishing the difference of principal agent between PPP project and traditional definition in corporate government,and defining the critical parameters of principal agent model in PPP project;Second,the incentive forms of government to social capital in PPP project were sorted out taking the practice situations of PPP project into consideration;Third,on the condition of above research,four limitations of incentive mechanism in PPP project were obtained,i.e.,ambiguous inceptive goal,inadequacy incentive preference,unreasonable inventive period and incomplete inventive form.Based on the four aspects of the limitations,some optimization paths of incentive mechanism in PPP project were put forward:forming a good incentive mechanism of target incentive oriented in incentive goal;taking the bounded rationality of social capital into the design of incentive mechanism on incentive preference;forming a long-term performance evaluation in incentives periods with operation period as the main incentive mechanism;introducing implicit incentives,constructing the complete dynamic incentive system in incentive form.So,the main contributions of this article were embodied in the following four aspects:1.Clear incentive target is the primary part of incentive mechanism design.There are two aspects if the inventive target in PPP project:on the one hand,controlling the speculative behavior of the social capital which may exist in the process of project construction and operation,on the other hand,promoting the efforts of the social capital behavior,and improving project construction and operation performance.For the former,the supervision and necessary punishment measures are usually employed by government usually which were called negative incentives;and for the latter,appropriate incentive pay is set up generally which is called stimulus.Based on the background of the development of PPP project in Chinese,this paper divided the project company's behavior into advantageous behavior which is benefit to the construction and operation of the PPP project and unfavorable behavior which is bad the project.At last,this paper studied how to make use of negative incentives inhibition of rent-seeking behavior and social capital is incentives to strengthen its efforts to behavior.2.A large amount of experimental economics and psychology shows that people's behavior is limited rational.Behavioral economics experiments show that the behavior agents of economic activities have the pursuit of fairness preferences.This paper studied the influence to incentive mechanism design of fairness preference based on the theory of motivation fairness preferences and income fairness preference theory,at the same time,some methods to optimize the incentive mechanism of the PPP project were put forward under the condition of the hypothesis that the social capital has the motivation fairness preferences and income fairness preferences.3.Reasonable government compensation is one of the effective methods to attract social capital to participate in the PPP project,but different effects shows in different stages of the project,so the period of compensation is directly related to the effectiveness of the incentive result.To this problem,this article launches the research from two aspects:on the one hand,the impacts of government compensation to investment decisions,operation decisions and exit decisions were analyzed.What is more,a comparison analysis with government compensation and without government compensation to the social capital's investment and operation decision is taken;on the other hand,the game models of optimal incentive situation were constructed during the period of incentive,and analyzed the incentive efficiency in different compensation mechanism of PPP project from the angle of government.4.The government focuses more on the dominant incentive contracts and lacks the implicit incentive which relies on market mechanism in the incentive form,because of the market mechanism is to be improved and the expansion of the PPP project is in its infancy.This phenomenon leads to the imperfect incentive mechanism in PPP project and is the critical reason of short-term of social capital's behavior and lacking of long-term binding of social capital's behavior.On the basis of explicit incentive,this paper introduces the implicit incentive based on reputation effect to optimize the incentive mechanism of the PPP project.In this paper,the research is not only an extension of traditional principal agent theory and PPP project inventive theory,but also a combination of theory and practice of PPP based on the limitations in PPP development.On the condition of deep analysis,some optimization paths and measures to improve inventive efforts of PPP project were put forward by using math methods and a deep analysis of the background.The purposes of this research are to perfect the incentive system of PPP project,optimal the incentive mechanism of PPP project,improve the inventive structure of PPP project and combine short-term incentive and long-term incentive,thus this research has double meaning of theory and practice.