Research On PPP Project Contract Characteristics,Local Government Integrity And Private Sector Investment Level From The Perspective Of Incomplete Contract

In the context of economic downturn,the PPP(Public-Private Partnership)model has become an important part of the infrastructure and public goods provided by local governments.By introducing the capital of the private sector and using its professional management level and flexible management mechanism to reduce the operation and investment cost of the project itself is one of the important aspects of implementing the PPP project.However,most PPP projects in China have a low willingness to invest in private capital in the course of actual operations,which runs counter to the original intention of activating private capital through PPP projects.Most of the previous literatures explored the impact of private sector investment PPP projects from the macro-environment level,such as institutional quality,economic environment and other macro factors.The private sector participates in PPP projects for profit-making motivation,while the contract in PPP projects directly affects the costs and benefits of private sector participation in PPP projects.Compared with macro-influence factors(institutional quality,economic environment,political stability,etc.),it is more feasible to adjust the factors related to the contract.Therefore,studying the relationship between the PPP project contract characteristics and the private sector investment level can provide practical guidance for decision makers in local governments who are interested in attracting private investment.Based on the incomplete contract theory,this study studies the intrinsic motivation of private sector investment PPP projects from the perspective of incomplete contracts.Based on this,this study selects the PPP project of China from 1990 to 2016 as the research object,and uses the private sector investment level as the explanatory variable of this study,with the contract characteristics as the explanatory variable and the local government cleanliness as the adjustment variable.Construct econometric models,descriptive statistical analysis,correlation analysis and generalized linear regression analysis,examine the impact of PPP project contract characteristics on private sector investment levels,and test the relationship between local government cleanliness and contractual characteristics and private sector investment levels.The research conclusions show that:(1)There is a positive correlation between the PPP project contract type and the private sector investment level.The more residual control that the private sector retains in the PPP project contract,the higher the level of private sector investment.Due to the incompleteness of the PPP project contract,residual control plays an important role in the incentive mechanism of the private sector.(2)There is a positive correlation between the asset specificity of the PPP project contract and the private sector investment level.The higher the asset specificity of the project,the more dedicated assets the government and the private sector invest,the higher the conversion cost of the change partner,so the private sector has a strong irreplaceability,creating a private investor A sense of investment security.(3)The cleanliness of local governments enhances the relationship between the type of contract and the level of investment in the private sector.In areas with low government cleanliness,due to the poor government reputation,the private sector will reduce the trust of the local government in the case of equal residual control,which will affect the private sector's investment decisions and avoid the investment level.