FAIRNESS PREFERENCE BASED DECISION-MAKING MODEL FOR CONCESSION PERIOD IN PPP PROJECTS

Both government and private sector have the characteristic of fairness preference when deciding a suitable concession period for infrastructure projects. The appropriate concession period is helpful to construct the Public-Private-Partnership (PPP) project, to alleviate governments financial burden, and to boast the economic growth. Therefore, this paper aims to develop a decision-making model of concession period with fairness preference based on the two sides equitable utilities. To better describe decision makers fair psychology, the Nash bargaining game solution was adopted as a fair reference point. The results show that the concession period with fairness preference will become longer than that without fairness preference. Furthermore, the longer the concession period is, the better construction quality of the infrastructure project (highway) is. So, decision makers with fairness preference tend to make good decisions. In conclusion, the developed decision-making model renders useful references for both government and private sector in negotiating the concession period for infrastructure projects.