Aggressive Biddings and the Renegotiation of Concession Contracts : Empirical Evidence for Peru

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% to 3%. This impact is higher for the transportation sector. Our results are robust to several econometric specifications. These results confirm the hypothesis that bidders are willing to submit aggressive bids with a view to renegotiating contract terms once the government and concessionaire are tied and competition is no longer possible