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Competitive Tendering and Optimal Size in the Regional Bus Transportation Industry: An Example from Italy

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  • C. Cambini
  • M. Filippini

Abstract

When defining how to implement tendering procedures for the regional bus transportation industry, one of the main problems local authorities have to face is setting the area size to be assigned as franchised monopoly. This paper's aim is to analyse the topic by combining some empirical results and evidence from recent developments in the Italian regional bus industry. The empirical results show that the bus transportation sector is characterized by the presence of economies of density and scale. These results imply that the best strategy for introducing competition in the bus industry is a competitive tendering approach for an area of given dimension and not necessarily a route‐by‐route tendering. However, it seems that the criterion applied by local authorities in Italy is much more related to political issues—such as jurisdictional boundaries of a municipal or provincial area—than a desire to promote the exploitation of economies of scale and density.

Suggested Citation

  • C. Cambini & M. Filippini, 2003. "Competitive Tendering and Optimal Size in the Regional Bus Transportation Industry: An Example from Italy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 74(1), pages 163-182, March.
    • Handle: RePEc:bla:annpce:v:74:y:2003:i:1:p:163-182
    DOI: 10.1111/1467-8292.00220
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    Cited by:

    1. Andrea Boitani & Marcella Nicolini & Carlo Scarpa, 2013. "Do competition and ownership matter? Evidence from local public transport in Europe," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1419-1434, April.
    2. Julie Brux & Claudine Desrieux, 2014. "To allot or not to allot public services? An incomplete contract approach," European Journal of Law and Economics, Springer, vol. 37(3), pages 455-476, June.
    3. Sheng, Dian & Meng, Qiang, 2020. "Public bus service contracting: A critical review and future research opportunities," Research in Transportation Economics, Elsevier, vol. 83(C).
    4. Astrid Cullman & Mehdi Farsi & Massimo Filippini, 2009. "Unobserved Heterogeneity and International Benchmarking in Public Transport," CEPE Working paper series 09-65, CEPE Center for Energy Policy and Economics, ETH Zurich.
    5. Boitani, Andrea & Cambini, Carlo, 2006. "To bid or not to bid, this is the question: the Italian experience in competitive tendering for local bus services," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 33, pages 41-53.
    6. Avenali, Alessandro & Boitani, Andrea & Catalano, Giuseppe & D’Alfonso, Tiziana & Matteucci, Giorgio, 2018. "Assessing standard costs in local public bus transport: A hybrid cost model," Transport Policy, Elsevier, vol. 62(C), pages 48-57.
    7. Beniamina Margari & Fabrizio Erbetta & Carmelo Petraglia & Massimiliano Piacenza, 2007. "Regulatory and environmental effects on public transit efficiency: a mixed DEA-SFA approach," Journal of Regulatory Economics, Springer, vol. 32(2), pages 131-151, October.
    8. Ida, Yoram & Talit, Gal, 2015. "Regulation of public bus services: The Israeli experience," Transport Policy, Elsevier, vol. 42(C), pages 156-165.
    9. Carlo Cambini & Massimiliano Piacenza & Davide Vannoni, 2007. "Restructuring Public Transit Systems: Evidence on Cost Properties from Medium and Large-Sized Companies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(3), pages 183-203, November.
    10. Giovanni Fraquelli, 2007. "Optimal Scale and Efficiency of the Italian Public Utilities," L'industria, Società editrice il Mulino, issue 1, pages 205-228.
    11. Bajada, Thérèse & Titheridge, Helena, 2016. "To contract or to operate publicly? Observations from the bus service reform transition process in Malta," Research in Transportation Economics, Elsevier, vol. 59(C), pages 281-291.
    12. Avenali, Alessandro & Catalano, Giuseppe & D'Alfonso, Tiziana & Matteucci, Giorgio, 2020. "The allocation of national public resources in the Italian local public bus transport sector," Research in Transportation Economics, Elsevier, vol. 81(C).
    13. Germà Bel, 2013. "Local government size and efficiency in capital-intensive services: what evidence is there of economies of scale, density and scope?," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 6, pages 148-170, Edward Elgar Publishing.
    14. Avenali, Alessandro & Boitani, Andrea & Catalano, Giuseppe & D’Alfonso, Tiziana & Matteucci, Giorgio, 2016. "Assessing standard costs in local public bus transport: Evidence from Italy," Transport Policy, Elsevier, vol. 52(C), pages 164-174.
    15. Umberto Petruccelli & Salvatore Carleo, 2017. "Cost models for local road transit," Public Transport, Springer, vol. 9(3), pages 527-548, October.
    16. Giovanni Fraquelli & Massimiliano Piacenza & Graziano Abrate, 2004. "Regulating Public Transit Networks: How do Urban‐Intercity Diversification and Speed‐up Measures Affect Firms’ Cost Performance?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 193-225, June.
    17. Beria, Paolo & Grimaldi, Raffaele, 2010. "Unconventional factors of efficiency in public transport. A case study and theory," MPRA Paper 29234, University Library of Munich, Germany.
    18. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in Local Public Transportation," Journal of Transport Economics and Policy, University of Bath, vol. 41(3), pages 345-361, September.
    19. González-Díaz, Manuel & Montoro-Sánchez, Ángeles, 2011. "Some lessons from incentive theory: Promoting quality in bus transport," Transport Policy, Elsevier, vol. 18(2), pages 299-306, March.
    20. Hensher, David A., 2007. "Bus transport: Economics, policy and planning," Research in Transportation Economics, Elsevier, vol. 18(1), pages 1-507, January.
    21. J.A. den Hertog, 2010. "Review of economic theories of regulation," Working Papers 10-18, Utrecht School of Economics.
    22. Massimo Filippini & Martin Koller & Urs Trinkner, 2010. "Do opening hours and unobserved heterogeneity affect economies of scale and scope in postal outlets?," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1007, USI Università della Svizzera italiana.
    23. Ripplinger, David G. & Bitzan, John D., 2018. "The cost structure of transit in small urban and rural U.S. communities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 176-189.

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