Achieving Synergy of Complementary Projects through Social Coordination

Abstract

Coordination in the implementation of complementary demand-driven infrastructure projects is projected to increase the efficiency and benefit of the undertaking. The task of the social coordinator, assumed to be the government in this paper, is to ensure that such coordination take place to increase joint benefit. On the other hand, from the optimal timing perspective, project proponents have four possible choices depending on the implementation schedule of the complementary project: Implement now, implement subsequent to complementary project (Subsequent Implementer), implement prior to complementary project (Prior Implementer), or Synchronize Implementation. The reaction functions of Project A in maximizing its net present value, given the timing of Project B, are simulated. Possible equilibrium conditions are derived using the concept of Nash Equilibrium for non-cooperative games. Framework for the viability of the possible strategies for coordination is evaluated using the concept of side payment.