Abstract
AbstractThe global expansion of public-private partnerships (PPPs) has generated interest in risk allocation for PPP projects. Many previous researchers have shown that without proper risk allocation, PPP projects cannot be successful. Current research is limited to equilibrium allocation of risk. The objective of this study is to improve this situation by constructing an alternating offer bargaining game model of risk allocation between two players involved in PPP projects, i.e., the public and private sector. Risk allocation can be analyzed as a game to more fully reflect the bargaining process among the parties. Equilibrium risk allocation outcomes were analyzed for the two cases in which the bargaining process was initiated in the first round by the public or private sector, and shows that risk allocation ratio is associated with the sequence of alternating offer, discount factor, and asymmetric degree of information. The probability, severity, and impact of risk factors were considered to prioritize ...
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