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The Distance Factor in Swedish Bus Contracts: How far are operators willing to go?
KTH, School of Architecture and the Built Environment (ABE), Transport Science. Statens väg- och transportforskningsinstitut.ORCID iD: 0000-0002-9219-8493
(English)Manuscript (preprint) (Other academic)
Abstract [en]

One of the factors differentiating operators the most in bus services is, arguably, the respective distances from their workplaces to the area of a procured contract. More dead running kilometers implies higher costs, and the same should affect operators’ probability to participate in tenders. As previous studies have discussed, this is a relevant competitive factor, but the transport literature lacks studies aiming to assess the size of this distance factor. This paper examines what impact operators’ distance to tendered bus contracts has on their probability to participate in the tender, and how this probability differs across operator types.

To address this, an econometric analysis was undertaken using probit regressions with data on tendered Swedish bus contracts over the period 2007–2015 along with operator workplace data. The results show that operators’ distance from a contract has a significantly negative effect on their probability of placing a bid for the contract. While being located near the contract gives, on average, an over 90 percent probability of participating, being 10 kilometers away results in a 30 percent probability. The rival’s distance to the contract also has an effect, but only to a limited extent. Large operators are found to be less affected by their distance to a contract, and they are also more inclined to bid if the procuring authority offers a depot to use.

Keywords [en]
Competitive tendering, Distance, Dead running kilometers, Bus, Entry, Competition
National Category
Economics Transport Systems and Logistics
Research subject
Transport Science
Identifiers
URN: urn:nbn:se:kth:diva-217250OAI: oai:DiVA.org:kth-217250DiVA, id: diva2:1154875
Note

QC 20171107

Available from: 2017-11-06 Created: 2017-11-06 Last updated: 2017-11-07Bibliographically approved
In thesis
1. Competition in Public Transport: Essays on competitive tendering and open-access competition in Sweden
Open this publication in new window or tab >>Competition in Public Transport: Essays on competitive tendering and open-access competition in Sweden
2017 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The results of this work show that the cost efficiency of tendered bus services is similar across all Swedish counties, except for the more high-density counties where efficiency is lower. Considerably lower efficiency is also found for contracts with services run in-house by the Public Transport Authority (PTA), compared to when the same service is run by a private actor. With respect to the competitive environment, it was found that many contract design factors have little or no effect on the number of bids that the PTA sees in their tenders. No measure that could be imposed by a single PTA was found to increase the total number of bidders by more than 0.5 bidders. However, the results suggest that PTAs as a collective could try to avoid tendering too many contracts at the same time because this was shown to reduce participation by up to about two bidders. In addition, these studies show that the local competitive environment is important for the PTAs to consider. The way in which contract areas are defined will also affect the participation rate as operators were found to participate in tenders to a lower extent the farther their workplaces are from the contract area. While larger operators appear to be less sensitive with respect to such distances, the fact that smaller operators are, and that they often bid as one unit as members of cooperation companies, makes the competitive environment important. The results suggest that depots could be included in the contract to stimulate participation, but this is by no means the only nor an easy solution.

This thesis has also analyzed the entry made in 2015 by MTR Express (MTR) on the Stockholm-Gothenburg railway line. The overall conclusion is that customers are indeed facing lower prices one and a half years after the entry. MTR's prices are on average 100 SEK lower than the incumbent SJ's prices. Furthermore, the analysis shows that the incumbent’s prices have also gone down, by almost 13 percent, following the entry.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2017. p. 26
Series
TRITA-TSC-PHD ; 17-005
Keywords
Competition, Public Transport, Tendering, Procurement, Cost efficient, Bus, Railway, Open access competition
National Category
Transport Systems and Logistics Economics
Research subject
Transport Science
Identifiers
urn:nbn:se:kth:diva-217267 (URN)978-91-88537-05-8 (ISBN)
Public defence
2017-12-08, Kollegiesalen, Brinellvägen 8, Kungl Tekniska Högskolan, Stockholm, 14:00 (English)
Opponent
Supervisors
Note

QC 20171106

Available from: 2017-11-06 Created: 2017-11-06 Last updated: 2017-11-06Bibliographically approved

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Vigren, Andreas

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