2017 Volume 73 Issue 5 Pages I_309-I_322
The economic value of water concession project depends on two major factors, unit price of water and the number or the rate of connection. If the government provides appropriate level of unit price or the number of connection as a requirement in a concession contract, the information of technology for water provision is necessary. However, it is rate for the government to have sufficient information of technology owned by private companies. Therefore, ‘technology-proposal bidding system’ under which bidders propose both of unit price and the number of connection is often applied. This paper analyzes the economic results under two typical award systems under technology-proposal bidding system, i.e. the lowest price award system and the most number of connection award system. In addition, the strategic hold-up behavior of concessionaire after signing the contract is analyzed. Based on the analytical result, the policy implication on the pros and cons of two award systems are discussed.