Impact of the collaboration mechanism of PPP projects based on consumer participation: A system dynamics model of tripartite evolutionary game.

Abstract

Developing countries need a large number of social infrastructure projects (e.g. schools, medical care, nursing homes). But the government's finance to invest in these projects is limited. By using the public-private partnership (PPP) mode to attract social capital to invest in PPP projects, it can relieve the financial pressure and improve the operation efficiency. The cooperation between government and consumer can ensure the sustainable development of the project operation. A system dynamics model of tripartite evolutionary game is developed to analyze the interaction of participant's strategies and simulate the corresponding evolution process. We employ the scenario analysis method to investigate the impact of the key parameters in relation with PPP projects based on realistic scenario assumptions. The results reveal the effect of some policies including reverse effect, blocking effect and over-reliance effect. Specifically, the results show that high penalty can prevent social capital from providing low-quality services, the low cost of government regulation can promote social capital to provide high-quality services, compensation to consumer can increase the enthusiasm of consumer participating in supervision, appropriate difference between price and cost of high-quality service as social capital's profit can encourage social capital to provide high-quality service. These policy suggestions will contribute to the sustainable development of social infrastructures in PPP mode.