Impact of corporate risk attitude and demand uncertainty on BOT contract design
XIONG Minghua
Abstract：Build-Operate-Transfer(BOT)model has been widely applied in transportation infrastructure projects.However,market demand uncertainty and varying risk attitudes of corporate managers can significantly impact BOT contracts.This paper considers both risk attitudes and demand uncertainty to construct a stylized model,exploring the effects of these factors on the design of BOT contracts.The research findings indicate that the optimal concession period for the government depends on its operational costs.When the government's operational costs are high,it tends to choose the project's lifecycle as the concession period.For risk-averse(risk-seeking)companies,their pricing decreases(increases)with demand fluctuations.Increased demand fluctuations are detrimental to corporate profits.However,the impact of demand fluctuations on social welfare is influenced by corporate risk attitudes,with the study suggesting that the government should collaborate with risk-averse companies.
Keywords：BOT projectscontract designrisk attitudesdemand fluctuationsconcession period
Publication Date：2025-01-29
Online Publishing Date：2025-08-15(First online date of this platform, not the publication date of the document)
Pages：7( 52-58 )