Liu, F; Wang, Y; Li, H and Zhou, X (2021) Influence of cooperative period of municipal PPPs on transaction cost: a case study. Engineering, Construction and Architectural Management, 28(4), pp. 1261-1277. ISSN 0969-9988
Abstract
Purpose: The purpose of the study is to numerically investigate the relationship between the increase in transaction cost and prolongation of cooperative period acting as a nonmonetary incentive for municipal PPP projects. Design/methodology/approach: A model that combines real option theory and the concept of prospect theory is proposed in the study. Three municipal road PPP projects published by China Public Private Partnerships Center are selected as cases. The data of these cases are analyzed based on the model established. Findings: The prolongation of the cooperative period affects the increase in transaction cost, which gradually decreases when the prolonged cooperative period increases. Furthermore, the large-investment PPP projects own more transaction cost compared with less-investment projects. The decrease in transaction cost in the former is less than that in the latter. The increase in transaction cost is evidently alleviated in a project with less investment when the cooperative period is prolonged further. Originality/value: The study systematically analyzes the relationship among transaction cost economics, real option theory and prospect theory and proposes a theoretical flowchart of the effect of nonmonetary incentive on the transaction cost. A model to quantify the effect of nonmonetary incentive (i.e. prolongation of cooperative period) on the transaction cost is proposed for the first time. The results of the study verify that the nonmonetary incentive affects transaction cost.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | prolongation of cooperative period; prospect theory; real option theory; transaction cost |
| Index terms: | transaction cost, China, prospect theory, methodology, case study, real option, public private partnership |
| Subjects: | financial analysis, research methods, Geography, contractual arrangements, economic analysis, data collection methods |
| Topics: | Procurement, Geographical Context, Research Practice, Cost Management, Business Strategy |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here