BOT (Build Operate Transfer):
It is a way for private enterprises to participate in infrastructure construction and provide public services to the society.
China generally refers to “concession rights”, which refers to government agencies signing a concession agreement with a private company (project company) for an infrastructure project, and awarding the contracting party’s private company (including foreign companies) to undertake the investment of the project. Financing, construction, and maintenance, within the concession period specified in the agreement, permit it to finance the construction and operation of specific public infrastructure, and permit it to recoup its investment and make profits by collecting fees from users or selling products to repay loans. The government has the right to supervise and control the infrastructure, and the concession period expires. The private enterprise of the contracting party transfers the infrastructure to the government department for free or for compensation.
Contemporary capitalist countries have introduced strong state intervention on the basis of a market economy. Meanwhile economics in theory, also affirmed the "look at the role was to see the hand" of the market economy gradually evolved into a mixed market economy and the planned combination. "BOT" precisely has the characteristics of a mixed economy combining this market mechanism with government intervention.
On the one hand, "BOT" can keep the market mechanism working. Most of the economic activities of the "BOT" project are conducted in the market. The government's practice of determining the project company through tendering also includes a competition mechanism. The private sector, which is a reliable market entity, is the subject of the "BOT" model. During the concession period, it has complete property rights for the construction projects. In this way, the behavior of private institutions undertaking "BOT" projects in the implementation process of "BOT" projects is in full compliance with the assumption of economic man.
On the other hand, "BOT" provides an effective way for government intervention, which is an agreement with the private sector on the "BOT". Although the implementation of the "BOT" agreement is entirely the responsibility of the project company, the government has control of the project from beginning to end. The government's wishes played a decisive role in the three phases of project establishment, tendering and negotiation. In the performance phase, the government has the power to supervise and inspect. The formulation of the price in the project management is also regulated by the government. The government can also use the common "BOT" law to restrict the behavior of "BOT" project companies.