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

Laure Athias and Antonio Nunez

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Winner’s curse; Common value auction; Public Private Partnerships; incomplete contract (search for similar items in EconPapers)
JEL-codes: D44 D82 H11 H54 H57 L51 (search for similar items in EconPapers)
Date: 2008-04-20
New Economics Papers: this item is included in nep-com and nep-ppm
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Citations: View citations in EconPapers (5)

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https://mpra.ub.uni-muenchen.de/17086/1/MPRA_paper_17086.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10539

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