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The more the merrier? Number of bidders, information dispersion, renegotiation and winner’s curse in toll road concessions

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  • Athias, Laure
  • Nunez, Antonio

Abstract

We empirically assess the winner’s curse effect in auctions for toll road concessions. First, we investigate the overall winner’s curse effects on bidding behaviour. Second, we account for differing levels of common-value components. Third, we investigate whether the possibility of renegotiation affects the winner’s curse effect. Using a unique dataset of 49 concessions, we show that the winner’s curse effect is particularly strong, i.e. bidders bid less aggressively when they expect more competition. In addition, we observe that this effect is larger for projects where the common uncertainty is greater, and is dampened in weaker institutional frameworks, in which renegotiations are easier.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10539.

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Date of creation: 20 Apr 2008
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Handle: RePEc:pra:mprapa:10539

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Keywords: Winner’s curse; Common value auction; Public Private Partnerships; incomplete contract;

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References

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Cited by:
  1. Gino Loyola, 2008. "On bidding markets: the role of competition," Economics Working Papers we083318, Universidad Carlos III, Departamento de Economía.
  2. Reza Farrahi Moghaddam & Fereydoun Farrahi Moghaddam & Mohamed Cheriet, 2014. "A Multi-Entity Input Output (MEIO) Approach to Sustainability - Water-Energy-GHG (WEG) Footprint Statements in Use Cases from Auto and Telco Industries," Papers 1404.6227, arXiv.org, revised Apr 2014.

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