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

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  • 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.
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Suggested Citation

  • Antonio Estache & Jose-Luis Guasch & Atsushi Iimi & Lourdes Trujillo, 2009. "Multidimensionality and Renegotiation: Evidence from Transport-Sector Public-Private-Partnership Transactions in Latin America," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 41-71, September.
  • Handle: RePEc:kap:revind:v:35:y:2009:i:1:p:41-71
    DOI: 10.1007/s11151-009-9225-0
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2015. "Soft Budgets and Renegotiations in Public-Private Partnerships:Theory and Evidence," Working Papers wp408, University of Chile, Department of Economics.
    2. repec:hal:wpaper:hal-00512813 is not listed on IDEAS
    3. Eshien Chong & Carine Staropoli & Anne Yvrande-Billon, 2014. "Auction versus Negotiation in Public Procurement: Looking for Empirical Evidence," Post-Print hal-00512813, HAL.
    4. Albano, Gian Luigi & Cesi, Berardino & Iozzi, Alberto, 2017. "Public procurement with unverifiable quality: The case for discriminatory competitive procedures," Journal of Public Economics, Elsevier, vol. 145(C), pages 14-26.
    5. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2015. "Soft Budgets and Renegotiations in Public-Private Partnerships: Theory and Evidence," Documentos de Trabajo 317, Centro de Economía Aplicada, Universidad de Chile.
    6. 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).
    7. Elisabetta Iossa & David Martimort, 2011. "The Theory of Incentives Applied to the Transport Sector," Chapters,in: A Handbook of Transport Economics, chapter 29 Edward Elgar Publishing.
    8. Percoco, Marco, 2014. "Quality of institutions and private participation in transport infrastructure investment: Evidence from developing countries," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 50-58.
    9. Miguel Vazquez & Michelle Hallack, 2017. "Efficiency versus transaction costs in multidimensional auctions: the case of Brazilian oil and gas lease auctions," IEFE Working Papers 94, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    10. Domingues, Sérgio & Sarmento, Joaquim Miranda, 2016. "Critical renegotiation triggers of European transport concessions," Transport Policy, Elsevier, vol. 48(C), pages 82-91.
    11. Estache, Antonio & Iimi, Atsushi, 2009. "Auctions with endogenous participation and quality thresholds : evidence from ODA infrastructure procurement," Policy Research Working Paper Series 4853, The World Bank.
    12. Baldi, Simona & Bottasso, Anna & Conti, Maurizio & Piccardo, Chiara, 2016. "To bid or not to bid: That is the question: Public procurement, project complexity and corruption," European Journal of Political Economy, Elsevier, vol. 43(C), pages 89-106.

    More about this item

    Keywords

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

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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