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Competition in Public Transport: Essays on competitive tendering and open-access competition in Sweden
KTH, School of Architecture and the Built Environment (ABE), Transport Science. Statens väg- och transportforskningsinstitut.ORCID iD: 0000-0002-9219-8493
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. , 26 p.
Series
TRITA-TSC-PHD, 17-005
Keyword [en]
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: urn:nbn:se:kth:diva-217267ISBN: 978-91-88537-05-8 (print)OAI: oai:DiVA.org:kth-217267DiVA: diva2:1154880
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
List of papers
1. Cost efficiency in Swedish public transport
Open this publication in new window or tab >>Cost efficiency in Swedish public transport
2016 (English)In: Research in Transportation Economics, ISSN 0739-8859, E-ISSN 1875-7979, Vol. 59, 123-132 p.Article in journal (Refereed) Published
Abstract [en]

Over the last couple of years, costs in Swedish public transport have increased substantially, and there is little knowledge in what affects cost efficiency. This study aims at determining how different contractual and environmental factors affect cost efficiency, and whether cost efficiency differs between Public Transport Authorities (PTA). A stochastic frontier analysis is conducted using contract-level data for the 21 PTAs and year 2013

The main findings are that cost efficiency is lower if a contract is operating in areas with high population density, or if the traffic is supplied by a publicly owned operator without using competitive tendering. Furthermore, no major differences in cost efficiency are found across PTAs, with the exception of the counties of Stockholm and Skåne, both counties with high population density, and the county of Västmanland, where all public transport is provided without competitive tendering. The finding of lower cost efficiency in high-density areas calls for further investigation into why this is. Potential explanations are the need for higher peak capacity, or more complex transportation systems. Finally, usage of direct-awarding of public transport should be clearly motivated, as this affects cost efficiency negatively.

Keyword
Public transport, Cost, Economic efficiency, Transport authority, Contract, Competition, Population
National Category
Economics
Research subject
00 Road: General works, surveys, comprehensive works, 02 Road: Economics; 10 Road: Transport, society, policy and planning, 111 Road: Public transport
Identifiers
urn:nbn:se:kth:diva-217268 (URN)10.1016/j.retrec.2016.05.009 (DOI)000391074400015 ()2-s2.0-84992697302 (Scopus ID)
Note

QC 20171107

Available from: 2016-11-25 Created: 2017-11-06 Last updated: 2017-11-07Bibliographically approved
2. How Many Want to Drive the Bus?: Analyzing the number of bids for public transport bus contracts
Open this publication in new window or tab >>How Many Want to Drive the Bus?: Analyzing the number of bids for public transport bus contracts
(English)Manuscript (preprint) (Other academic)
Abstract [en]

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.

Keyword
Tendering, Bidding, Bus, Public transport, Contract design, Count data
National Category
Economics Transport Systems and Logistics
Research subject
Transport Science
Identifiers
urn:nbn:se:kth:diva-217249 (URN)
Note

QC 20171107

Available from: 2017-11-06 Created: 2017-11-06 Last updated: 2017-11-07Bibliographically approved
3. The Distance Factor in Swedish Bus Contracts: How far are operators willing to go?
Open this publication in new window or tab >>The Distance Factor in Swedish Bus Contracts: How far are operators willing to go?
(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.

Keyword
Competitive tendering, Distance, Dead running kilometers, Bus, Entry, Competition
National Category
Economics Transport Systems and Logistics
Research subject
Transport Science
Identifiers
urn:nbn:se:kth:diva-217250 (URN)
Note

QC 20171107

Available from: 2017-11-06 Created: 2017-11-06 Last updated: 2017-11-07Bibliographically approved
4. Competition in Swedish passenger railway: Entry in an open access market and its effect on prices
Open this publication in new window or tab >>Competition in Swedish passenger railway: Entry in an open access market and its effect on prices
(English)In: Economics of Transportation, ISSN 2212-0122, E-ISSN 2212-0130Article in journal (Refereed) Accepted
Abstract [en]

The Swedish market for passenger railway services has been open to competition since the year 2010. Although minor entries have been made since this date, the incumbent SJ only faced substantial competition on the tracks when MTR entered the Stockholm-Gothenburg line in March 2015. Using unique Swedish ticket price data from operators’ websites, this paper investigates what effects this entry has had on market prices.

The results show that the incumbent’s prices decreased by 12.6 percent on average between March 2015 and June 2016. The price level of the competitor is well below the average price that was offered in the pre-entry period. Further, the largest price reduction, in percentage terms, was found on tickets booked 13 days before departure date. Finally, the observed price decrease in the paper is most likely at a short-run equilibrium, or an ongoing process, implying that prices might adjust further in the long-run.

Keyword
Railway, Entry, Open access, Price competition, Web crawler
National Category
Economics Transport Systems and Logistics
Research subject
Transport Science
Identifiers
urn:nbn:se:kth:diva-217266 (URN)10.1016/j.ecotra.2017.10.005 (DOI)
Note

QC 20171107

Available from: 2017-11-06 Created: 2017-11-06 Last updated: 2017-11-07Bibliographically approved

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