Analysis on supervision mechanism of government in PPP contract

From the dynamic perspective, a two-staged incentive model between public and private sectors is designed based on the Holmstrom-Tirole incentive model under principal-agent theory framework, aiming at building the relational contract between public and private sectors. In the model, the expected benefit of relational contract and the dynamic interactions between two stages are considered. Besides, the optimal effort level of private sectors and reward-punishment factors of public sectors in each stage are analyzed by applying backward induction, especially the dynamic interactions between two stages. Lastly, the contingent incentive mechanism will be advanced by integrating the external supervision and intrinsic incentive in PPP contract.