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

  • Athias, Laure
  • Nunez, Antonio

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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