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Competitive Tendering as a Contracting Mechanism for Subsidising Transport: The Bus Experience


  • David A. Hensher
  • Ian P. Wallis


Competitive tendering (CT) is a popular mechanism for the provision of transport services where a major objective is the containment of the cost to government of service provision. Although the primary focus is recognised as cost efficiency, whereby the cost outcome should be conditional on a given level of service, difficulties in establishing appropriate tests for service level compliance has become a cause of concern regarding the effectiveness of the CT paradigm as a value for money initiative. This paper reviews the international successes and failures of CT as a subsidy reduction strategy within the bus sector, and promotes the idea of Performance Based Contracts as a way of recognising the real role of subsidy under the umbrella of a value for money objective. © 2005 LSE and the University of Bath

Suggested Citation

  • David A. Hensher & Ian P. Wallis, 2005. "Competitive Tendering as a Contracting Mechanism for Subsidising Transport: The Bus Experience," Journal of Transport Economics and Policy, University of Bath, vol. 39(3), pages 295-322, September.
  • Handle: RePEc:tpe:jtecpo:v:39:y:2005:i:3:p:295-322

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