This paper investigates the determinants of the difference between reserve prices and winning bids in the transmission electricity auctions in Brazil from 1999 to 2010, by using an econometric approach based on Heckman (1979) that considers the heterogeneity among winner's and loser's bids, and the endogeneity of that selection. Given the full sample of winner's and loser's bids, the heterogeneity of the groups is modeled and the bias from the classification endogeneity is corrected. The approach of this research is justified by the fact that studies that focus only on winning bids and ignore the endogeneity of the winning group selection can lead to misleading conclusions.
