Winner’s curse in toll road concessions

Athias, Laure; Nunez, Antonio Benigno

doi:10.1016/j.econlet.2008.07.017

Cited by 40 publications

(20 citation statements)

References 3 publications

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“…A standard interpretation is that this corresponds to cases of Winner's Curse. However, there is empirical evidence that lowballing bids is higher under weaker institutional frameworks, where renegotiations is easier, see Athias and Nuńez [2008] and Athias and Nuńez [2009]. This is consistent with our prediction of the association of opportunistic renegotiations and lowballing.…”

supporting

confidence: 81%

Renegotiations in public-private partnerships: Theory and evidence

Engel¹,

Fischer

Galetovic

2017

ITF Roundtable Reports

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supporting

confidence: 81%

Renegotiations in public-private partnerships: Theory and evidence

Engel¹,

Fischer

Galetovic

2017

ITF Roundtable Reports

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“…Thus, risk transfer reduces the benefit of competition due to the ''winner's curse'' problem. 39 Using a dataset of toll road concessions worldwide, Athias and Nunez (2008) find empirical evidence of this phenomenon.…”

Section: Allocation Of Demand Risk To the Concessionaire: Trade Offsmentioning

confidence: 98%

Contract and procurement design for PPPs in highways: the road ahead

Iossa

2015

Econ Polit Ind

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We review international practice in concession-based public private partnerships (PPPs) for highways, in the light of the economic theory of incentives, procurement and regulation. In particular, we analyse alternative funding mechanisms to cover highway costs, and their impact on demand risk allocation, incentives, cost of capital, and likelihood of renegotiation. We note how real tolls must pursue a number of contrasting objectives, which may be best served by introducing tariff discrimination. We discuss alternative tariff regulations used in practice and warn against tariff mechanisms that transfer demand risk to users and depart from the principles of price cap regulation. We highlight that it is desirable to transfer some traffic risk to the concessionaire but the level of risk transfer should be lower at the beginning of the contract, especially for greenfield projects where little demand information is initially available. We discuss the procurement of highway PPPs, focusing on the choice of the bidding variables, and on the distortions that renegotiations introduce at bidding stage. We stress the importance of strong institutions and absence of political interference in regulatory matters, and we highlight the benefit of respecting and standardizing contract terms.

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“…This can lead to the so-called -winner's curse‖. 22 This phenomenon, documented in a study by Athias and Nunez (2008), is more likely to occur when the institutional environment allows contracts to be easily renegotiated. Athias and Nunez's study examined 49 concession projects around the world and showed that private operators bid less aggressively when they expect strong competition (i.e.…”

Section: Uncertainty Related To the Project And Optimistic Offersmentioning

confidence: 99%

Financing Green Urban Infrastructure

Merk

Saussier²,

Staropoli

et al. 2012

OECD Regional Development Working Papers

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This paper presents an overview of practices and challenges related to financing green sustainable cities. Cities are essential actors in stimulating green infrastructure; and urban finance is one of the promising ways in which this can be achieved. Cities are key investors in infrastructure with green potential, such as buildings, transport, water and waste. Their main revenue sources, such as property taxes, transport fees and other charges, are based on these same sectors; cities thus have great potential to -green‖ their financial instruments. At the same time, increased public constraints call for a mobilisation of new sources of finance and partnerships with the private sector. This working paper analyses several of these sources: public-private partnerships, tax-increment financing, development charges, value-capture taxes, loans, bonds and carbon finance. The challenge in mobilising these instruments is to design them in a green way, while building capacity to engage in real co-operative and flexible arrangements with the private sector.

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Winner’s curse in toll road concessions

Cited by 40 publications

References 3 publications

Renegotiations in public-private partnerships: Theory and evidence

Renegotiations in public-private partnerships: Theory and evidence

Contract and procurement design for PPPs in highways: the road ahead

Financing Green Urban Infrastructure

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