Competitive provision of public services: cost savings over successive rounds of tendering

Luis Angeles and Robin G. Milne

Applied Economics Letters, 2016, vol. 23, issue 9, 627-632

Abstract: We study the evolution of the cost of public service provision when subjected to a competitive tendering process. We add to the existing literature by analysing cost savings over successive rounds of tendering. Previous results in the literature show that initial cost savings tend to disappear over time with the age of the contract. Our findings suggest that each additional round of tendering will be followed by a renewal of cost savings. Thus, keeping competitive pressure via periodic tendering appears to address the problem.

Date: 2016
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DOI: 10.1080/13504851.2015.1093079

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