The Game Modle Of BOT Project Finance

Since the 1990s,the international capital begins to choose many ways to get involved in construction of the large-scale infrastructure in china, alone with extending investment field of foreign businessmen. Among those investment ways, the BOT(Built-Operate-Transfer) becomes the focus for a time. Our country has already tried or been brewing this investment and financing way of BOT actively in some places in recent years, for solving effectively the problem of choke point induced by the inconsistency between the fast development of economic and the lagging relatively of infrastructure. the whole country and even the whole world focus them attention on the development of western regions, but the problem that the development met at first is the deficiency of fund . So, BOT being bring into effect in large-scale construction has great realistic significance to attract the domestic and international fund and increase the capital source of the development of western regions.Most of the articles of BOT project financing expound completion risk, management risk, financial risks , market risk, national risk ,and soon on ,which exist in BOT. but there seldom is a issue of moral hazard mentioned in those articles. But currently, there are quite a few of behaviors of practicing fraud illegally, which has caused serious casualties and property loss, in the course of our country's project financing and management. Although there are drawbacks of system, the major reason is short of the mechanism of effective incentive and restriction.This article prepares to analyze the project financing of BOT in terms of moral hazard, and get some conclusions. Some Basic theories of BOT project financing that correlates with my model will be introduced at first. After this, simple game model between two side will be set up to discuss the effect of company's net value, credit and ability, debt overhang and collateralization. Then, basing the game model between two side and employing its ideal of model and theory, the game model among three side will be set up to analysis the optimal incentive contracts under moral hazard. A conclusions has been get that the investment under incentive must be higher than a threshold, and then the risk averseness' impact to threshold investment and the asymmetric information has been analyzed. At last, the signal of good company will be brought forward.