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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.

This study assumes that consumer expenditures occur in a stepwise fashion in which income is fist allocated to budget categories and then to optimum quantities within each category. With this assumption, a model was developed to estimate the price and icome elasticities of demand of all items in one budget category—like food—and the cross‐price elasticities of these items with all others. The approach permits one to specify the changes in expenditure levels on budget categories from cross‐section information and the flexibility of money. The model was empirically applied to Argentine consumption data.

Traffic growth, Traffic maturity, Demand forecast, Elasticity,

No abstract