Expected Number of Bidders and Winning Bids: Evidence from the London Bus Tendering Model

In this paper we investigate the relationship between operating cost and number of bidders for local bus contracts in London. Using an original database on 806 calls for tender on bus routes, we find that a higher number of bidders, whether actual or expected, is associated with a lower cost of service. This finding has important policy implications, especially for countries in which only few bidders can participate (as in France). Our results indeed point out that the unbundling of an urban transport network may be a source of significant cost reductions. © 2013 LSE and the University of Bath