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Determining optimal capital structure and concession period length in BOT scheme using trilateral bargaining game model
journal contribution
posted on 2019-03-01, 00:00 authored by M Bayat, M Khanzadi, Farnad NasirzadehFarnad NasirzadehEquity:debt ratio and concession period length are the most important financial variables to consider when analyzing a buildoperate- transfer (BOT) agreement. Because the involved parties have conflicting interests regarding these variables, this research introduces a new trilateral bargaining model which helps the BOT participants to model the BOT negotiation process (especially in a procurement process based on direct negotiation) and reach an efficient agreement on the concession period length and equity:debt ratio considering the conflicting interests and different bargaining powers of the sponsor, government, and lender. First, a mathematical interpretation of conflicting financial interests of the parties is introduced. Then the noncooperative and cooperative bilateral bargaining games are combined as a novelty of this research to develop a trilateral bargaining game model enabling consideration of the negotiation process in BOT projects. The proposed model can be used to predict the concession period length and capital structure simultaneously. Finally, the proposed model is implemented in a real-world BOT project and the application and performance of the proposed model are illustrated.
History
Journal
Journal of infrastructure systemsVolume
25Issue
1Article number
04018036Pagination
1 - 15Publisher
American Society of Civil EngineersLocation
Reston, Va.Publisher DOI
ISSN
1076-0342Language
engPublication classification
C1 Refereed article in a scholarly journalCopyright notice
2018, American Society of Civil EngineersUsage metrics
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