(Potential) Number of Bidders and Winning Bids Evidence from the London Bus Tendering Model

25 juin 2012

Miguel Amaral, Stéphane Saussier et Anne Yvrande-Billon, Journal of Transport, Economics and Policy, 2013, Volume 47, Number 1, p.17-34, (2013)

Abstract: In this paper we 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 we 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, our results point out that the allotment of an urban transport network may be a source of significant costs reductions.