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Multidimensionality and Renegotiation: Evidence from Transport-Sector Public-Private-Partnership Transactions in Latin America

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Author Info

  • Antonio Estache

    ()

  • Jose-Luis Guasch

    ()

  • Atsushi Iimi

    ()

  • Lourdes Trujillo

    ()

Abstract

Multidimensional auctions are a natural and practical solution when auctioneers pursue more than one objective in their public-private-partnership transactions. However, it is difficult to achieve auction efficiency with multiple award criteria. Using auction data from road and railway concessions in Latin America, the probability of renegotiation this paper estimates by a two-stage least squares technique with a binary selection in the first-stage regression. The findings show that auctioneers tend to adopt the multidimensional format when the need for social considerations, such as alleviation of unemployment, is high. This implies that such political considerations could hinder efficiency and transparency in auctions. The analysis also shows that the renegotiation risk in infrastructure concessions increases when multidimensional auctions are used. Rather, good governance, particularly anti-corruption policies, can mitigate the renegotiation problem.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11151-009-9225-0
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 35 (2009)
Issue (Month): 1 (September)
Pages: 41-71

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Handle: RePEc:kap:revind:v:35:y:2009:i:1:p:41-71

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: Corruption; Governance; Infrastructure development; Multidimensional auctions; Private sector participation; D44; H44;

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References

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  1. Steven Tadelis, 2009. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 372-399, October.
  2. Andersson, Per & Hultén, Staffan & Valiente, Pablo, 2005. "Beauty contest licensing lessons from the 3G process in Sweden," Telecommunications Policy, Elsevier, vol. 29(8), pages 577-593, September.
  3. Kerf, M. & Gray, R.D. & Irwin, T. & Levesque, C. & Taylor, R.R. & Klein, M., 1998. "Concessions for Infrastructure. A Guide to their Design and Award," Papers 399, World Bank - Technical Papers.
  4. Patrick Bajari & Steven Tadelis, 1999. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," Working Papers 99029, Stanford University, Department of Economics.
  5. Antonio Estache & D. Benitez, 2005. "How concentrated are global infrastructure markets?," ULB Institutional Repository 2013/43970, ULB -- Universite Libre de Bruxelles.
  6. Estache, Antonio & Gonzalez, Marianela & Trujillo, Lourdes, 2002. "What Does "Privatization" Do for Efficiency? Evidence from Argentina's and Brazil's Railways," World Development, Elsevier, vol. 30(11), pages 1885-1897, November.
  7. Cabizza, Mariella M. & De Fraja, Gianni, 1998. "Quality considerations in auctions for television franchises," Information Economics and Policy, Elsevier, vol. 10(1), pages 9-22, March.
  8. Guasch, Jose Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2005. "Concessions of Infrastructure in Latin America: Goverment-Led Renegotiation," IDEI Working Papers 372, Institut d'Économie Industrielle (IDEI), Toulouse.
  9. repec:rne:rneart:v:4:y:2005:i:3:p:220-242 is not listed on IDEAS
  10. Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
  11. Cripps, Martin & Ireland, Norman, 1994. "The Design of Auctions and Tenders with Quality Thresholds: The Symmetric Case," Economic Journal, Royal Economic Society, vol. 104(423), pages 316-26, March.
  12. Lalive, Rafael & Schmutzler, Armin, 2008. "Exploring the effects of competition for railway markets," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 443-458, March.
  13. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2008. "Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 421-442, March.
  14. Torta, Fabio, 2005. "The Concession Through a Bid - the New Brescia-Milan Highway: a Case Study," Research in Transportation Economics, Elsevier, vol. 15(1), pages 135-143, January.
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Citations

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Cited by:
  1. Antonio Estache & A. Iimi, 2009. "Auctions with Endogenous Participation and Quality Thresholds: Evidence from ODA Infrastructure Procurement," Working Papers ECARES 2009_006, ULB -- Universite Libre de Bruxelles.
  2. repec:hal:wpaper:hal-00512813 is not listed on IDEAS
  3. Dethier, Jean-Jacques & Moore, Alexander, 2012. "Infrastructure in developing countries: An overview of some economic issues," Discussion Papers 123305, University of Bonn, Center for Development Research (ZEF).

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