Is the mere threat enough? An empirical analysis about competitive tendering as a threat and cost efficiency in public bus transportation

Philipp Wegelin

Research in Transportation Economics, 2018, vol. 69, issue C, 245-253

Abstract: In public transport governance, competitive tendering has often demonstrated good results in ensuring cost efficiency. To achieve other goals, such as a high service quality, ridership growth, or building trusting partnerships between public transport operators and public transport authorities (PTAs), however, more cooperative governance instruments may be suitable. One proposition is to use competitive tendering only occasionally but keep the threat to apply it whenever necessary; thereby, it is assumed that operators behave as if there were competition for the market. In addition, PTAs can overcome information asymmetries and establish effective benchmarking schemes. This paper empirically assesses this indirect effects of (the threat of) competition on cost efficiency using stochastic cost frontier analysis with a panel data set containing more than 850 concessionary regional bus lines in Switzerland from 2008 to 2017. Results show that inefficiency is indeed lower for bus lines where any indirect effect of competitive tendering can be assumed. Although preliminary, these findings indicate that a more flexible use of competitive tendering and its combination with other, rather cooperative governance instruments such as negotiations could support PTAs pursuing cost efficiency as well as additional goals and thereby maximise overall welfare.

Keywords: Governance; Potential competition; Contestable markets; Competitive tendering; Direct awarding; Benchmarking; Frontier analysis (search for similar items in EconPapers)
JEL-codes: K23 L11 L92 L98 R48 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0739885917302391
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:retrec:v:69:y:2018:i:c:p:245-253

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_2&version=01

DOI: 10.1016/j.retrec.2018.05.002

Access Statistics for this article

Research in Transportation Economics is currently edited by M. Dresner

More articles in Research in Transportation Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().