Multidimensionality and Renegotiation : Evidence from Transport-Sector Public-Private-Partnership Transactions in Latin America

Multidimensional auctions are a natural and practical solution when auctioneers pursue more than one objective in their public-private-partnership transactions. However, it is difficult to achieve auction efficiency with multiple award criteria. Using auction data from road and railway concessions in Latin America, the probability of renegotiation this paper estimates by a two-stage least squares technique with a binary selection in the first-stage regression. The findings show that auctioneers tend to adopt the multidimensional format when the need for social considerations, such as alleviation of unemployment, is high. This implies that such political considerations could hinder efficiency and transparency in auctions. The analysis also shows that the renegotiation risk in infrastructure concessions increases when multidimensional auctions are used. Rather, good governance, particularly anti-corruption policies, can mitigate the renegotiation problem.

Bibliographic Details

Main Authors:	Estache, Antonio, Guasch, Jose-Luis, Iimi, Atsushi, Trujillo, Lourdes
Language:	English
Published:	World Bank, Washington, DC 2008-07
Subjects:	ADVERSE SELECTION, AIRPORTS, AUCTION, AUCTION DESIGN, AUCTION MECHANISM, AUCTION MECHANISMS, AUCTIONS, BANKRUPTCIES, BANKRUPTCY, BID, BIDDING FOR CONCESSIONS, BIDDING PROCESS, BIDS, BUS, BUS INDUSTRY, CAPABILITY, COMPETITIVE BIDDING, COMPETITIVE PROCUREMENT, CONCESSION CONTRACTS, CONCESSION TRANSACTIONS, CONCESSIONAIRES, CONTRACT PERIODS, COUNTRY DUMMY, CREDIBILITY, CURRENCY, CURRENCY CRISIS, DEFICITS, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DIESEL, DIVESTITURE, DUMMY VARIABLE, DUMMY VARIABLES, ELECTRICITY, ELECTRICITY DISTRIBUTION, FINANCIAL CAPACITY, FINANCIAL VIABILITY, FREIGHT, FREIGHT SERVICE, FUTURE DEMAND, GLOBAL STANDARDS, GOOD GOVERNANCE, GOVERNANCE INDICATORS, GOVERNANCE INDICES, GOVERNMENT COMPENSATION, GOVERNMENT POLICIES, GOVERNMENT POLICY, HIGHWAY, HIGHWAY CONSTRUCTION, HOLDING, INFRASTRUCTURE CONCESSION, INFRASTRUCTURE CONCESSIONS, INFRASTRUCTURE DEVELOPMENT, INFRASTRUCTURE OPERATIONS, INFRASTRUCTURE SECTOR, INSTRUMENT, INTERNATIONAL BANK, INVESTMENT REQUIREMENTS, INVESTMENT VALUE, LACK OF TRANSPARENCY, LATIN AMERICAN, LEASE CONTRACT, LENGTH OF ROAD, LENGTH OF ROADS, LICENSES, LIVING STANDARDS, LOCOMOTIVE, MIDDLE EAST, MISSING DATA, MOTORWAYS, NATIONAL RAILWAY, NETWORKS, NEW TECHNOLOGY, NORTH AFRICA, PASSENGER RAIL, PASSENGER SERVICES, PASSENGER TRAIN, POLITICAL CONSIDERATIONS, POSITIVE COEFFICIENT, POWER, PRICE COMPETITION, PRIVATE OPERATORS, PRIVATE PARTNERSHIP, PRIVATE SECTOR, PRIVATE SECTOR INVOLVEMENT, PRIVATE SECTOR PARTICIPATION, PRIVATIZATION, PRODUCTIVITY, PUBLIC INFRASTRUCTURE, PUBLIC PROCUREMENT, PUBLIC SECTOR, PUBLIC SERVICES, PUBLIC-PRIVATE PARTNERSHIP, QUALITY OF SERVICES, RAIL, RAIL FREIGHT, RAIL INDUSTRY, RAIL PROJECTS, RAIL SECTOR, RAIL SERVICES, RAILROAD, RAILROAD CONCESSIONS, RAILROADS, RAILWAY, RAILWAY COMPANIES, RAILWAY COMPANY, RAILWAY INDUSTRY, RAILWAY NETWORK, RAILWAY SECTOR, RAILWAY SYSTEM, RAILWAYS, REGULATORY ENVIRONMENT, REGULATORY FRAMEWORK, RELIABILITY, RENEGOTIATION, RENEGOTIATIONS, RESULT, RESULTS, RETRENCHMENT, RETURN, ROAD, ROAD CONCESSIONS, ROAD PROJECTS, ROAD SECTOR, ROAD TRAFFIC, ROUTES, SANITATION, SOCIAL COST, SPEEDS, SUB-SAHARAN AFRICA, TARIFF CHANGES, TECHNOLOGICAL DEVELOPMENT, TECHNOLOGY DEVELOPMENT, TELECOMMUNICATIONS, TELEVISION, TENDERS, TOLL, TOLL ROAD, TRAFFIC, TRANSACTION, TRANSMISSION, TRANSPARENCY, TRANSPORT, TRANSPORT INFRASTRUCTURE, TRANSPORT SECTOR, TRANSPORTATION, TRUE, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, URBAN DEVELOPMENT, USER, UTILITIES, WATER DISTRIBUTION, WEB, WORLD DEVELOPMENT INDICATORS,
Online Access:	http://documents.worldbank.org/curated/en/2008/07/9670222/multidimensionality-renegotiation-evidence-transport-sector-public-private-partnership-transactions-latin-america https://hdl.handle.net/10986/6847
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