Auction Procedures and Competition in Public Services: The Case of Urban Public Transport in France and London

In many countries, governments are pushing for the introduction of competition in the organization of public services and more broadly in public procurement. The development of public-private partnerships throughout the world is a good illustration of this trend. In order to foster competition, competitive tendering through the use of auctions is now common. Nevertheless, competition for the field must be organized. Depending on the rules of the game chosen, introducing competition for the field may or may not be successful. In this paper we investigate two alternative models for organizing local public services, namely the French and the London models of urban public transport. Few competitors and collusive behaviours, with increasing costs, characterize the French model, while the London model, as far as we have seen, exhibits better results, by using the transparency of auction procedures and the discretionary power of the regulator as two complementary instruments to foster competition and prevent anti-competitive behaviours.