System Dynamics Analysis of Evolutionary Game Strategies between the Government and Investors Based on New Energy Power Construction Public-Private-Partnership (PPP) Project

Lei Gao,Zhen-Yu Zhao

doi:10.3390/su10072533

Abstract

The public-private-partnership (PPP) is a new mode for the government and social capital to jointly invest in public infrastructure projects. In particular, PPP projects for new energy power construction have been strongly supported in some countries in recent years, because it can not only reduce financial pressure on the government, but also promote the development of new energy. Current scholars study the economic benefits of PPP projects for new energy power construction from a macro perspective, and they rarely study behavioral strategies of the government and social capital as a game process of project construction from a micro perspective. This paper will fill this gap. This study firstly built an evolutionary game model of the government and investors based on new energy power construction PPP projects. Secondly, taking China’s typical new energy power construction PPP project–waste incineration power generation as an example, the system dynamics (SD) model was proposed to simulate the evolutionary process of game players’ behavioral strategies. Finally, the effects of key factors in the construction of PPP project on the strategies’ stability were studied. The results show that: (1) there is no evolutionarily stable strategy (ESS) in the game system between the government and investors, and system evolution is characterized by periodic behavior. (2) When the government implements dynamic bounty measures, the system evolution process is still a closed loop with periodic motion. However, when the government implements dynamic punishment measures, there is a stable ESS in the hybrid strategy of the game system. (3) The government can increase unit fines when making dynamic strategic adjustments, which will not only promote the active cooperation of investors, but also reduce the probability of government supervision, thereby reducing costs.

Highlights

A public-private-partnership (PPP) is a partnership between the government and social capital in the field of infrastructure and public services
Social capital is mainly responsible for the design, construction, operation, and maintenance of the project, and the government department is responsible for supervising the price and quality of the project, thereby ensuring the maximum social benefits of the PPP project [1]
Since the system dynamics (SD) system in our study represents the probability of a behavioral strategy rather than predicting the actual value of each indicator, the

Summary

Introduction

A public-private-partnership (PPP) is a partnership between the government and social capital in the field of infrastructure and public services. The government encourage the development of PPP through the top-level mechanism design for the reason that the construction of new energy power under the PPP model can enable the government and social capital (such as new energy power construction investors) to exert their own characteristics, advantages and expertise, thereby relying on considerable project investment benefits and risk-dispersion mechanisms to form a cooperative alliance body. This will alleviate the financial pressure, and increase the efficiency of the government to promote the development of national infrastructure and public services

Methods

Results

Conclusion