Non-competition Guarantee Value Model Research Based on Real Option

In infrastructure financed projects, in order to attract private investors, host governments often provide some guarantees. This paper develops a value model of non-competition guarantee with real option theory. The model is applied to infrastructure financed projects using the non-competition guarantee under derivation. The derivation results indicate that, there is incentive effect to investors when the non-competition guarantee is used by governments. Non-competition value increases with a bigger growth rate of traffic flow. And its value decreases with a bigger volatility of traffic flow.