Typology of Strategic Behaviour in PPPs for Expressways: Lessons from China and Implications for Europe

Abstract

In line with governance trends around the world, a growing number of expressways in the People’s Republic of China are managed as Public-Private Partnerships (PPPs). The tremendous growth in demand for mobility in newly emerging economies has led to a gap between investment needs and available public funding. Using private funds is potentially helpful in closing this gap and accommodating the social and economic needs of motorization. By some, it is also hoped that contracting-out and involvement of the private sector will lead to higher transparency and accountability. However, in line with what has been found in various transport infrastructure modes, during uncertain and hazy transition periods that arise after infrastructure reforms, many forms of potentially pernicious strategic behaviour can pop up. Strategic behaviour emerges from information a-symmetry between private and public players, where the former act as agents and the latter as principals. In this article, China’s evidence on various types of strategic behaviour in the management of expressways is found. Several PPP projects for expressways in China are investigated empirically. And conclusions are drawn as to what possible cures are effective countermeasures of strategic behaviour, and what are the implications for Europe.