Title

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

Authors

Andreas Vigren

Document Type

Journal Article

Publication Date

2020

Subject Area

place - europe, place - urban, mode - bus, organisation - contracting, organisation - competition, economics - revenue

Keywords

Competitive tendering, Distance, Dead running kilometers, Bus, Entry, Competition

Abstract

One of the factors differentiating public transport operators the most in bus services is, arguably, the respective location, and thus distance from, their workplaces to the area of a procured contract. Sub-optimal depot locations relative the lines run result in disadvantages in knowledge about the contract and the risk of running unpaid (or dead running) bus kilometers, leading to higher costs and/or less revenue and could affect an operator’s 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 km away results in some 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.

Rights

Permission to publish the abstract has been given by Elsevier, copyright remains with them.

Comments

Transportation Research Part A Home Page:

http://www.sciencedirect.com/science/journal/09658564

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