Pareto Improvement to Return Model in BOT Project
Qing Huang · Journal of Southwest Jiaotong University · 2006
A traditional return model of the BOT project was derived based on the principle-agent theory.Analysis of the mode indicates that the agent(project company) will not chose an action favorable to the principal(government).This is because the traditional contract does not meet the agent's participation constraint.A Pareto improvement was made to the traditional return model,which makes the model meet the agent's participation constraint.In the modified model,the agent will choose an action favorable to the principal,while its own return is not affected.