IDEAS home Printed from
   My bibliography  Save this paper

Private information, competition and the renewal of delegation contracts: an econometric analysis of water services in France


  • Guillem Canneva

    () (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - AgroParisTech - CEMAGREF - Centre national du machinisme agricole, du génie rural, des eaux et forêts - IRD [France-Sud] - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes)

  • Serge Garcia

    () (LEF - Laboratoire d'Economie Forestière - INRA - Institut National de la Recherche Agronomique - AgroParisTech)


The renewal of franchise bidding for natural monopolies is often considered to be insufficiently competitive. We hypothesize that this may be due to the fact that the incumbent operator knows the existing network better than his competitors. This type of private information creates what is referred to as the "winner's curse" during renewal auctions. Since bidders anticipate it, the competition may be less fierce, leading to a less effective selection procedure. We propose a methodology that makes it possible to distinguish this type of information from the more standard private information parameter that characterizes the idiosyncratic productivity of each operator. We have built a model that simultaneously explains the choice of operator made by the local community and the degree of competition during the renewal process. This selection model makes it possible to estimate prices in a second step without a selection bias. We use an original database for the renewal of a lease contract for water utility operations in France. The results highlight the effect of common value information on the selection of an operator, combined with local concentration effects. This approach provides some perspectives for improving the effectiveness of franchise bidding procedures.

Suggested Citation

  • Guillem Canneva & Serge Garcia, 2011. "Private information, competition and the renewal of delegation contracts: an econometric analysis of water services in France," Post-Print hal-01191181, HAL.
  • Handle: RePEc:hal:journl:hal-01191181
    Note: View the original document on HAL open archive server:

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01191181. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.