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Fairness preference based decision-making model for concession period in PPP projects

  • * Corresponding author: Feng Xu

    * Corresponding author: Feng Xu
The first author is supported by Major Program of National Natural Science Foundation of China (71390521), National Natural Science Foundation of China(91646123, 71671088, 71271107, 71571098, 71501102, 71471077) and Innovation project project of graduate students in Jiangsu(KYZZ16 0026).
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  • Both government and private sector have the characteristic of fairness preference when deciding a suitable concession period for infrastructure projects. The appropriate concession period is helpful to construct the Public-Private-Partnership (PPP) project, to alleviate government's financial burden, and to boast the economic growth. Therefore, this paper aims to develop a decision-making model of concession period with fairness preference based on the two sides' equitable utilities. To better describe decision makers' fair psychology, the Nash bargaining game solution was adopted as a fair reference point. The results show that the concession period with fairness preference will become longer than that without fairness preference. Furthermore, the longer the concession period is, the better construction quality of the infrastructure project (highway) is. So, decision makers with fairness preference tend to make good decisions. In conclusion, the developed decision-making model renders useful references for both government and private sector in negotiating the concession period for infrastructure projects.

    Mathematics Subject Classification: Primary: 91A30, 91A80, 91A35; Secondary: 97M50.

    Citation:

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  • Figure 1.  The influence of government's fair preference degree on concession period and decision makers' expected fair interest

    Figure 2.  The influence of private's fair preference degree on concession period and decision makers' expected fair interest

    Figure 3.  The influence of both sides' fair preference degree on concession period

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