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Multidimensionality and renegotiation : evidence from transport-sector public-private-partnership transactions in Latin America

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  • Estache, Antonio
  • Guasch, Jose-Luis
  • Iimi, Atsushi
  • Trujillo, Lourdes

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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4665.

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Date of creation: 01 Jul 2008
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Handle: RePEc:wbk:wbrwps:4665

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Keywords: Transport Economics Policy&Planning; Debt Markets; Infrastructure Economics; E-Business; Emerging Markets;

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References

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  1. Birdsall, Nancy & Nellis, John, 2003. "Winners and Losers: Assessing the Distributional Impact of Privatization," World Development, Elsevier, vol. 31(10), pages 1617-1633, October.
  2. Antonio Estache & Marianela Gonzalez & Lourdes Trujillo, 2002. "What Does Privatization Do for Efficiency? Evidence from Argentina's and Brazil's Railways," ULB Institutional Repository 2013/43980, ULB -- Universite Libre de Bruxelles.
  3. J. Luis Guasch & Jean-Jacques Laffont & Stéphane Straub, 2007. "Concessions of infrastructure in Latin America: Government-led renegotiation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1267-1294.
  4. repec:rne:rneart:v:4:y:2005:i:3:p:220-242 is not listed on IDEAS
  5. 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.
  6. Rafael Lalive & Armin Schmutzler, 2005. "Exploring the Effects of Competition for Railway Markets," SOI - Working Papers 0511, Socioeconomic Institute - University of Zurich, revised Apr 2007.
  7. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
  8. 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.
  9. 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.
  10. Antonio Estache & D. Benitez, 2005. "How concentrated are global infrastructure markets?," ULB Institutional Repository 2013/43970, ULB -- Universite Libre de Bruxelles.
  11. Patrick Bajari & Robert McMillan & Steven Tadelis, . "Auctions versus Negotiations in Procurement: An Empirical Analysis," Working Papers 02007, Stanford University, Department of Economics.
  12. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications, The World Bank, number 15024.
  13. 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.
  14. 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.
  15. Flyvbjerg, Bent, 2005. "Policy and planning for large infrastructure projects : problems, causes, cures," Policy Research Working Paper Series 3781, The World Bank.
  16. 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.
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Cited by:
  1. 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).
  2. 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.
  3. repec:hal:wpaper:hal-00512813 is not listed on IDEAS

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