The government can limit the quantity and price of public goods or services provided by this institution, but it must ensure that private capital has the opportunity to make profits. The risks in the whole process are shared by the government and private institutions.
After the concession period is over, the private institution will hand over the facilities to the government department as agreed, and the government will designate the operation and management of the department. Therefore, it is more appropriate to translate the word BOT into infrastructure concession.
BOT characteristics
Contemporary capitalist countries have introduced strong state intervention on the basis of market economy. At the same time, economics also affirmed the role of the visible hand in theory, and the market economy gradually evolved into a mixed economy combining market and planning. BOT has the mixed economic characteristics of combining market mechanism with government intervention.
On the one hand, BOT can keep the market mechanism running. The economic activities of BOT projects are mostly carried out in the market, and the government's practice of determining the project company through bidding itself also includes the competition mechanism. As a reliable market subject, private institutions are actors of BOT mode, and they have complete property rights for construction projects within the concession period. In this way, the behavior of private institutions undertaking BOT projects in the process of implementing BOT projects fully conforms to the hypothesis of economic man.
Baidu encyclopedia -BOT model