How many want to drive the bus? Analyzing the number of bids for public transport bus contracts

Abstract

This paper examines how different factors relating to contract characteristics, and the operational and tender environment affect the number of unique bidders placing bids in tenders for bus contracts. A generalized Poisson model is used with a comprehensive data set containing most of the recently tendered bus contracts in Sweden, spanning the period 2007-2015. The main finding from the analysis is that most contract characteristics change participation in tenders by around 0.1-0.5 bidders. Operator-restricting measures, such as special requirements on buses, have a similar limited effect. Further, the number of tenders that are open at the same time as a specific tender was shown to reduce participation by almost 2 bidders. Finally, there is evidence that the local competitive environment is of importance, and the public transport authorities therefore need to be concerned with entry barriers in their tenders.

The Distance Factor in Swedish Bus Contracts How far are operators willing to go?

“…Given the enquiry document, operators interested in providing the requested service prepare and submit bids based on the conditions posed by the PTA. The contract characteristics, as well as the operational environment, affect the number and value of bids that a PTA receives (Vigren, 2017).…”

“…The vector x jm contains control variables of secondary interest in this paper, and these control for heterogeneity in contract characteristics and operational environment. These are the same variables as included in Vigren (2017) when estimating the number of bidders in bus contracts, which are arguably relevant also for the analysis in this paper. Although described below, more detailed information on the definition and construction of these variables is found in Vigren (2017).…”

“…These are the same variables as included in Vigren (2017) when estimating the number of bidders in bus contracts, which are arguably relevant also for the analysis in this paper. Although described below, more detailed information on the definition and construction of these variables is found in Vigren (2017). The included control variables are listed in Table 2, which also gives descriptive statistics for the variables.…”

“…These four counties were excluded because they do not procure services, because they use a different awarding method than the rest of the country, or because the counties' traffic is significantly different compared to most other public transport. For more on these exclusions, see the discussion in Vigren (2017), who also used the same contract data. The enquiry documents gave information on vehicle kilometers (logged), the number of bus lines, contract length, whether EMAT or combinatory bidding was used, and any forms of incentive payments.…”

“…An extract from the database for sector-codes 6 (SNI) relating to public transport operators was taken for the years 2007-2015, and the resulting list was further cleaned to only include active operators that have public transport operations. This selection is identical to the one made in Vigren (2017). Note also that operators that have never participated in the tender were excluded due to the model design 7 .…”