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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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Author Info
Athias, Laure
Nunez, Antonio

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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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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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Find related papers by JEL classification:
H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  23. Dakshina De Silva & Timothy Dunne & Anuruddha Kankanamge & Georgia Kosmopoulou, 2005. "The Impact of Public Information on Bidding in Highway Procurement Auctions," Microeconomics 0511011, EconWPA. [Downloadable!]
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  25. Bikhchandani, Sushil & Riley, John G., 1991. "Equilibria in open common value auctions," Journal of Economic Theory, Elsevier, vol. 53(1), pages 101-130, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gino Loyola, 2008. "On bidding markets: the role of competition," Economics Working Papers we083318, Universidad Carlos III, Departamento de Economía. [Downloadable!]
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