Using bargaining-game theory for negotiating concession period for BOT-type contract

Shen, L., Bao, H., Wu, Y. and Lu, W. (2007) Using bargaining-game theory for negotiating concession period for BOT-type contract. Journal of Construction Management and Engineering, 133 (5). pp. 385-392. ISSN 1943-7862 doi: 10.1061/(ASCE)0733-9364(2007)133:5(385)

Abstract/Summary

This paper extends the build-operate-transfer (BOT) concession model (BOTCcM) to a new method for identifying a concession period by using bargaining-game theory. Concession period is one of the most important decision variables in arranging a BOT-type contract, and there are few methodologies available for helping to determine the value of this variable. The BOTCcM presents an alternative method by which a group of concession period solutions are produced. Nevertheless, a typical weakness in using BOTCcM is that the model cannot recommend a specific time span for concessionary. This paper introduces a new method called BOT bargaining concession model (BOTBaC) to enable the identification of a specific concession period, which takes into account the bargaining behavior of the two parties concerned in engaging a BOT contract, namely, the investor and the government concerned. The application of BOTBaC is demonstrated through using an example case.