Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru*

Jose Bonifaz and Eduardo Saavedra

Utilities Policy, 2023, vol. 85, issue C

Abstract: This paper confirms a positive relationship between the aggressiveness of bids and the probability of renegotiating concession contracts. We use a database of 113 concessions awarded in Peru, finding that a 1% increase in bidding aggressiveness increases the probability of contract renegotiation by 2.4%–3%. This impact is higher for the transportation sector. Our results are robust to several econometric specifications. These results confirm the hypothesis that bidders will submit aggressive bids to renegotiate contract terms once the government and concessionaire are tied, and competition is no longer possible.

Keywords: Concessions; PPP; Aggressive biddings; Renegotiation; Peru (search for similar items in EconPapers)
JEL-codes: K41 L51 L91 L98 Y (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:85:y:2023:i:c:s0957178723001996

DOI: 10.1016/j.jup.2023.101687

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