Auctions, negotiation and winner's curse in coal mining in India Online publication date: Mon, 14-Dec-2020
by Soumendu Sarkar
International Journal of Management Practice (IJMP), Vol. 14, No. 1, 2021
Abstract: In this essay, we examine the move from negotiations to auctions as the method of allocation of coal mining blocks in India. The Economic Survey of India 2017-2018 recorded that the move to auctions for allocation of captive blocks has been less favourable than predicted, because of winner's curse. Late 2017, media reported that the government was considering revenue-sharing models for coal block allocation. In February 2018, the government opened up coal for commercial mining through ascending auctions. Given this contradiction, different allocation procedures need to be compared carefully with the nature and future trajectory of coal mining in India in mind. We begin with a background of the coal block allocation process in India. Subsequently, we review the relevant technical literature on allocation of natural resources. We then compare methods of allocation in terms of their suitability and performance for fulfilling the desired objectives of the government.
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