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

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  • Bonifaz, José L.
  • Saavedra, Eduardo H.

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.

Suggested Citation

  • Bonifaz, José L. & Saavedra, Eduardo H., 2023. "Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru," Utilities Policy, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:juipol:v:85:y:2023:i:c:s0957178723001996
    DOI: 10.1016/j.jup.2023.101687
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    More about this item

    Keywords

    Concessions; PPP; Aggressive biddings; Renegotiation; Peru;
    All these keywords.

    JEL classification:

    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • Y - Miscellaneous Categories
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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