Informational rents in oil and gas concession auctions in Brazil

- We estimate informational rents of bidders in oil and gas auctions in Brazil.
- We assume asymmetry and independent private value, with Petrobras as big player.
- We explore a dataset of bidding rounds from 1999 to 2008.
- Empirical distribution of bids and pseudo-values are estimated non-parametrically.
- Informational rents vary between 14% and 63%, with higher rents for Petrobras.

This article aims to estimate the informational rents earned by winning bidders in oil and gas exploration and production auctions in Brazil. We estimate the distributions of bids and bidders' private valuations using a nonparametric structural model and assuming independence and asymmetry between participants. Petrobras, the Brazilian state-owned petroleum giant and former oil sector monopolist, was considered a competitor that was distinct from other competitors. Thus, we investigate a database based on information from all auctions held between 1999 and 2008. The results suggest that Petrobras earned significantly higher information rents than other competitors. Such rents ranged from 15% to 63%, depending on the number and type of competitors.