Does Competition for the Field Improve Cost Efficiency? Evidence from the London Bus Tendering Model

Does Competition for the Field Improve Cost Efficiency? Evidence from the London Bus Tendering Model
Miguel Amaral (CES, Université Paris I Panthéon-Sorbonne), Stéphane Saussier (IAE Sorbonne Grad School) and Anne Yvrande-Billon (CES, Université Paris I Panthéon-Sorbonne)
Abstract : In this paper the authors investigate the relationship between cost and number of bidders for local transportation contracts in London.
Using an original database on 806 calls for tender on local bus transportation routes the authors find that a higher number of bidders is associated with a lower cost of service. This finding, in addition of being one of the few empirical tests of a crucial theoretical issue, has important policy implications, especially for countries in which bids are organized such that only few bidders are allowed to participate (e.g. France). More precisely, the results point out that the allotment of an urban transport network may be a source of significant costs reductions.
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