Governing Government-Project Owner Relationships in Water Megaprojects: a Concession Game Analysis on Allocation of Control Rights

Studying megaprojects from the micro-foundations rooted in organizational action and interaction, this research started with an extensive literature review and therefore proposed a conceptual model for governing government-project owner relationships. A cooperative game model was further developed based on the conceptual model and concession game theory. The results showed that the relationships between government and project owner could be indeed improved by considering the allocation of control rights within a certain range (0, $$ \frac{A_1-{A}_2+2{B}_2}{2{B}_1+2{B}_2} $$ ). Also, it was shown in two cases that project value was increased by over 10% on average when achieving the concession equilibrium, which could bring gains to both the government and project owner by redistributing the added value. This study contributes to existing research on top-level inter-organizational relationships in water megaprojects, provides important implications for maintaining cooperation between megaproject stakeholders, and suggests interesting trajectories for future research.