TheImpacts onDeposit andSubsidy Policy forInfrastructure PFIProjects

Inthis paper, weanalyze theeconomic benefit of thedeposit andthesubsidy policy forinfrastructure PFI (Private Finance Initiative) projects. Oneofthemostsubstantial characteristics ofPFIprojects related toinfrastructure facilities isexistence oftheexternal benefits. Theobjective oftheSPC (Special Purpose Company) istomaximize theprofit generated fromtheproject. Therefore, withconsidering theexternal benefit ofthePFIproject related toinfrastructure facilities, a private sector mayhaveincentive toliquidate avaluable project intermsofsocial welfare. Inthis paper, we arguethatthe deposit policy andthesubsidy policy implemented bythe government playa roleingiving anincentive tocontinue a valuable project. Thispapershowsthatthepolicy whichisa combination ofdeposit andsubsidy policy payment canimprove theefficiency ofaPFIproject withexternal benefits underthe condition thattheexternal benefit ofproject isuncertain.