A Law of Large numbers: Bidding and competitive tendering for refuse collection contracts
This paper concerns the relationship between refuse collection contract costs and the number of bidders for a sample of English local authorities. Compulsory Competitive Tendering (CCT) of blue collar services such as refuse collection and street cleaning was introduced in the UK by the Local Government Act 1988. This law, imposed by central government, obliged elected local authorities to expose specific services to competitive tendering at fixed intervals and subject to national guidelines. In this paper we use a newly constructed data set that contains information on the number of bids received for selected refuse collection contracts to analyze the economic impact of CCT. We find that a higher number of bids is associated with a lower cost of service. Moreover, controlling for the possible endogeneity of the number of bids strengthens this result. This finding, as well as being an important empirical verification of standard proposition in auction theory, also has important policy implications. The Labour Party in the UK has pledged itself to abolishing CCT, claiming that competitive tendering should only be used as a instrument of last resort. Our results suggest that this will lead to an increase in service costs.
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Aug 1997|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+44) 020 7291 4800
Fax: (+44) 020 7323 4780
Web page: http://www.ifs.org.uk
More information through EDIRC
|Order Information:|| Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE|
When requesting a correction, please mention this item's handle: RePEc:ifs:ifsewp:97/09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Seavers)
If references are entirely missing, you can add them using this form.