3. What caused imperfect competition (if you there it is imperfect or otherwise)?

Provide evidences.
For this case, there is an imperfect competition because the massive project is given solely to
Chinese firms. Through the loan signing for the construction of the project, China is now acting as a
monopoly because it has the exclusive contract for the construction of Kaliwa Dam. Even though
construction will be done by one entity while operation and maintenance will be done by another entity,
both firms are from China. Thus, China has a high market power because it can set the price it wants to
charge. Through the contract and monopoly power, the proponents can control the information, price, and
labor they need for the project. Moreover, the whole supply in the dam is controlled by China. There is also
barriers to entry because of the huge funding needed for the oversized design. These firms can exercise
control over the price because it does not have any other competitors.

firms act like an oligopoly because there are only a few players that were allowed to do the bidding. Both
of them have unique ways to solve the water shortage problem. For Japan, it would be through the
Integrated Public-Private Partnership (PPP).. For China, it would be through the Hybrid PPP.

3. What caused imperfect competition (if you there it is imperfect or otherwise)?

Provide evidences.
Exclusive contract complete control set price high market power
Oligopoly only two unique to solve secure long term supply
Monopoly in China
Product differentiation
Hybrid ppp monopoly
Construction and technology requirements barriers to entry
Price information labor sila dapat sila nag-propose cpaital resources they can set the price
Dalawa lang sila it's with Japan or china

5. What can still be done?

Think thoroughly
Water shortage needs to be solved
Lots of casulaties affected
Long pa matapos
Loan taxpayers that will not directly benefit
Users –pay fairer system
Really need a big dam?
Its not choosing between the two it is about who can

5. What can still be done?

Properly facilitate
Cooperate with different agencies
Expensive explain how it will benefit us
 Since the Chinese contractors are now acting like a monopoly, the government should strictly
regulate and impose strict rules to the firms. In this way, it will be assured that the construction being done
will be finished on time and completed successfully. It should also continually monitor the decision of the
Chinese firms because they can dictate the price as a monopoly through the exclusive contract. In terms of
labor and resources needed for the project, it should be from the Philippines in order to contribute to the
economic growth of the country by giving more jobs to the Filipinos rather than Chinese workers. The
government should also make sure that the plan will be implemented properly because it will be paid by
taxpayers all over the Philippines. Moreover, the government should oversee that the project will be
finished on time in order to avoid further water shortage in the country. The most important thing for this
project is to deliver the services faster and more efficiently to the public. The government should make sure
that the quality delivered by the Chinese firms is up to the standards for the cost incurred in this project.

The cons for this project (Did the government make a good decision?):
 “overriding problem is poor implementation and execution due to corrupt/incompetent
bureaucracy”
 Longer time to finish the project
 Lack of money is no longer a problem
Integrated PPP is the ability to tap private sector resources for public good.
o makes little sense to borrow large sums of money from foreign
sources including ODA, add to the national debt load and take
foreign exchange risk in the process
o greater efficiency of the private sector in building and operating
infrastructure projects
o Private sector investors in infra must deliver service to recover
their investments
 It cannot be said PPP projects by default have a higher risk of cost
overruns than ODA funded projects
o “The originally estimated project cost at appraisal was 49.33 billion yen, of which the
total Japanese ODA loan was 41.931 billion yen. During the project implementation, the
supplemental loan was provided, and the newly estimated cost became 82.166 billion
yen, of which the Japanese ODA loan was 59.037 billion yen.
o The actual project cost was 71.734 billion yen and the Japanese ODA loan disbursed was
58.138 billion yen. The actual project cost was higher than the planned cost, which is
equivalent to 145 percent of the planned cost.
o “However, if the foreign exchange rate (1 peso is 2.4 yen) at the appraisal stage and the
average rate (1 peso is 1.95 yen) during the implementation, which covers about 75
percent of the project cost, are taken into account, yen appreciated by about 20 percent. It
is considered that the project cost was higher than planned by about 100 percent in
Philippine peso.”