The control of moral hazard in PPP project renegotiation

The proportion of the renegotiation in PPP (public-private-partnership) projects was gradually increasing year by year, and the presentation of the adverse selection and moral hazard problems were also increasingly prominent. Moral hazard in the renegotiation not only led to the loss of social surplus, but also resulted that both sides could not get their maximum benefit in the long run. Government regulation, public supervision and incentive mechanisms were important factors which affected private enterprises to take opportunistic strategy or cooperative strategy in the renegotiation. After the renegotiation happened, through the qualitative and quantitative analysis on factors relevant of private enterprises´ moral hazard, the government could make response measures related to the maximum degree of inhibition of private enterprises´ moral hazard in the renegotiation.