Abstract

In municipal solid waste disposal public–private-partnership (PPP) projects, economic benefits, as well as social and ecological benefits, are critical in sustaining sustainability development. However, private investors may make more efforts for economic benefits than for social and ecological benefits out of self-interest. Because the government does not have the same information that the investors have, information asymmetry leads to opportunistic behavior. To solve these problems, principal–agent models were established to analyze the incentive mechanism for encouraging investors to adopt a positive attitude toward both economic benefits and social and ecological benefits, inhibiting investors’ opportunistic behavior. In particular, numerical simulation was carried out to analyze the relationships between related parameters (c1,c2,ct,a,β,k,λ,p). The results show that the investors with higher comprehensive abilities are more willing to make efforts for social and ecological benefits. An increase in incentive and governance intensity would help to encourage investors to make more efforts for project benefits and to lower the level of opportunistic behavior adopted by investors. The complexity of the task and the fuzziness of the perception of effort input results aggravate the uncertainty and risk of the projects due to information asymmetry. Therefore, real-time and positive incentives are important. In order to ensure the social and ecological benefits of a project, performance standards should be set according to the actual situation; investors prefer fixed compensation with lower risk, but fixed compensation does not have incentive effect, and the proportion should not be too high.

Highlights

  • With rapid economic development and urbanization, the disposal and management of municipal solid waste have become a serious problem in China

  • With the continuous promotion of the new urbanization strategy, it can be predicted that the urban population will continue to grow steadily in the future, and a large number of people will produce a large amount of municipal solid waste (MSW)

  • It is necessary to search for a new way to provide MSW disposal services [3], and increasing emphasis should be placed on enhancing efficacy of selective MSW collection in the place of MSW generation to improve the efficiency of waste disposal [10]

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Summary

Introduction

With rapid economic development and urbanization, the disposal and management of municipal solid waste have become a serious problem in China. The present study aims to fill this gap by establishing an incentive and governance model of multi-task principal-agent under information asymmetry to encourage investors to adopt a positive attitude toward both economic benefits, social and ecological benefits, and inhibit investors’ opportunistic behavior. We consider how to effectively encourage investors to make more effort for achieving the sustainable development goals of EB and SEB in MSW disposal PPP projects. Compared with the previous study, this paper separately considered EB and SEB of MSW disposal PPP projects, set the optimal proportion of economic benefits allocated to private investors, basic standard, and incentive coefficients for social and ecological benefits. Principal-agent models were constructed to analyze the incentive and governance mechanism for MSW disposal PPP projects, followed by discussions of the models.

Literature Review
Model Development
Model Analysis and Discussion
Numerical Example
Findings
Conclusions
Full Text
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