Contract Renewal as an Incentive Device: An Application to the French Urban Public Transport Sector

Axel Gautier () and Anne Yvrande-Billon ()
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Anne Yvrande-Billon: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: In the French urban public transport industry, operations are often delegated and periodically put out for tender. Thus, operators' incentives to reduce costs come from both profit maximization during the current contract and from the perspective of contract renewal. We construct a dynamic incentive regulation model that captures these features and we show that both the level of cost-reducing effort and its repartition during the contracting period depend on the contract type (cost-plus, gross cost, or net cost contract). We then estimate a cost frontier model for an eight-year panel of French bus companies (664 company-year observations) to test our predictions.

Keywords: Bus; Cost; Regulation; Transport (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

Published in Review of Economics and Institutions, 2013, 4 (1), pp.1-29. ⟨10.5202/rei.v4i1.88⟩

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Related works:
Journal Article: Contract Renewal as an Incentive Device. An Application to the French Urban Public Transport Sector (2013)
Working Paper: Contract Renewal as an Incentive Device: An Application to the French Urban Public Transport Sector (2013)
Working Paper: Contract renewal as an incentive device. An application to the French urban public transport sector (2008)
Working Paper: Contract Renewal as an Incentive Device. An Application to the French Urban Public Transport Sector (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01052683

DOI: 10.5202/rei.v4i1.88

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