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Competitive tendering versus performance-based negotiation in Swiss public transport

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  • Massimo Filippini

    (Institute of Economics (IdEP), University of Lugano; Swiss Federal Institute of Technology (ETH), Zurich, Switzerland)

  • Martin Koller

    () (Swiss Federal Institute of Technology (ETH), Zurich, Switzerland)

  • Giuliano Masiero

    (Department of Management, Information and Production Engineering (DIGIP), University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland)

Abstract

The purpose of this study is to assess differences in the levels of cost efficiency of bus lines operated under competitively tendered contracts and performance-based negotiated contracts. Following the revision of the Swiss railways act in 1996, regional public authorities were given the choice between two different contractual regimes to procure public passenger transport services. We directly compare the impact of competitive tendering and performance-based negotiation by applying a stochastic frontier analysis to the complete dataset of bus lines (n=630) operated by the main Swiss company (Swiss Post) at the same time (in 2009) throughout the country. The overall results show that the differences in the levels of cost efficiency between the two contractual regimes are not signi?cant. Our findings are in line with recent evidence of cost convergence between competitive tendering and performance-based negotiation, and suggest that the practice of using both contractual regimes is challenging for the operators in terms of competitive pressure. The threat of competitive tendering may have a disciplining effect on negotiation since it prevents bus companies from bargaining inadequate rents and inducing asymmetric information advantages.

Suggested Citation

  • Massimo Filippini & Martin Koller & Giuliano Masiero, 2015. "Competitive tendering versus performance-based negotiation in Swiss public transport," IdEP Economic Papers 1504, USI Università della Svizzera italiana.
  • Handle: RePEc:lug:wpidep:1504
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    1. repec:eee:eneeco:v:69:y:2018:i:c:p:325-334 is not listed on IDEAS
    2. repec:eee:trapol:v:60:y:2017:i:c:p:54-62 is not listed on IDEAS
    3. Daniel Albalate & Jordi Rosell, 2016. "Persistent and transient efficiency on the stochastic production and cost frontiers – an application to the motorway sector," Working Papers XREAP2016-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Oct 2016.
    4. Mathisen, Terje Andreas, 2016. "Competitive tendering and cross-shareholding in public passenger transport," Transport Policy, Elsevier, vol. 48(C), pages 45-48.
    5. repec:eee:transa:v:111:y:2018:i:c:p:266-276 is not listed on IDEAS

    More about this item

    Keywords

    public bus contracts; competitive tendering; performance-based negotiation; cost efficiency;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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