Hybrid markets in public transport – contract design, performance and conflicts

Document Type

Journal Article

Publication Date


Subject Area

place - europe, mode - bus, mode - rail, organisation - competition, organisation - contracting, ridership - growth, planning - service quality


Hybrid markets, Competitive tendering, Contract design, Conflicts, Incentives, Passenger growth, Costs, Public transport


Nearly all regional public bus services in Sweden have been competitively tendered for 30 years. The way to perform tenders has undergone significant changes since the first tenders were carried out in the late 1980s. The most important changes are: 1) pure gross cost contracts have been replaced with contracts that include bonus and malus clauses to safeguard the quality of the service or contracts with passenger incentives; 2) bundling of bus lines into larger networks; 3) requirements on operators to provide buses that use specific types of fuel, for example electricity or gas; and 4) bundling of bus and railway services into one contract.

The case in Sweden for using incentives based on the number of passengers is to a high extent motivated by a national goal to double the market for regional public transportation and is partly motivated as a way to solve practical problems encountered by the PTAs.

Building on previous research, the goal of this paper is to explore and compare how the contract design in tendered regional bus services in Sweden influences performance in terms of costs, passenger growth, and on the frequency of major conflicts between the contracting parties.

The economic performance and other effects of the different contract types are measured using a database on all Sweden's regional bus services, collected by the government agency Transport Analysis, and national data on public bus services published annually by the same agency. The conflict aspects are studied using the annual reports of the PTAs procuring the bus services.


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


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