Research on Government Compensation for Toll Road Public-Private Partnerships (PPP) Projects

Abstract

With the continuous implementation of the PPP projects, due to the imperfection of relevant policies, the blindness of government subsidy is constantly emerging. Thus, it is important to put forward a practical approach for valuing the subsidies and risk. In this paper, the revenue subsidies model and traffic subsidies model are established. Then combined with practical cases, Monte Carlo simulation is used to get the value and probability of government subsidies under different compensation ways. On this basis, the influence of initial traffic volume and traffic growth rate on government subsidies and net present value of investors is analyzed. The research findings can provide theoretical guidance for the government to choose a reasonable way of subsidies, balance the risk of compensation, and formulate subsidies policies.