The Application Of Dynamic Theory Games Of Complete Information In How To Determine The Concessionary Terms Of BOT Project Financing

The relative deficiency of public establishment has been the obstacle for many countries to develop their economy. The financing requirement of public establishment is much too great. Most countries can not afford this if it is barely depended on governments' investment. But BOT project financing can resolve this problem.As we all know, the most important problem of BOT project financing is how to undertake and manage risks and the key to solve it is how to determine the concessionary terms. Given short concessionary terms, the project company will select lower construction cost and maintenance cost for the sake of reducing the total cost and gaining profit. So it will influence construction quality and lifecycle. Thus the maintenance cost will be high, operation terms be shortened, income of government be reduced after the project is transferred to the government. Governments' protracting of concessionary terms may stimulate project company to increase the investment of building and operating the project so as to improve the quality and technique level of the project. But much too long concessionary terms will reduce the income of government. So there is the problem of how to determine the concessionary terms in order to maximize the avail of the government.It is the new field of the researching concessionary terms that introducing the means of game theory. The thesis sets up two models to analyze the concessionary terms of BOT project whose income is relatively stable or not. The "carving cake" model is to solve the concessionary terms of BOT project whose profit is stable. It looks the concessionary terms as the cake which will be carved by the government and the project company. In this model the consuming coefficient will determine the gains of government and project company. As far as the BOT project of unstable gaining, the thesis will use the differential coefficient and integral to calculate the concessionary terms in which the cost coefficientwill be the key factor.The bringing forward of BTOT is also derived from how to determine the concessionary terms. The BTOT project financing only adds the idea of "concessionary terms can be modified". It is the evolvement of BOT project financing. The bringing forward of BTOT certainly has the academic and factual theories. In fact there are many projects in which have been used the ideas. The author thinks that the dispute between government and project company will be continued because most of the BOT projects are being operated with time going by. So BTOT project financing will be applied in the future, at least the idea of "concessionary terms can be modified" will be ratified and applied.