Strategic Pricing by Oligopolists in Public Tenders of Passenger Railway Services
An important component in the deregulation of the public sector in the European Union is publicprocurement of services and products. This paper studies the bidding behavior of firms participating inpublic tenders of passenger railway services in Sweden. At a later stage in this research, the intentionis to broaden the analysis to include the similar markets of Great Britain and Germany. A generalassumption in the paper is that firms sometimes place very low bids and sometimes very high bids intenders. In a theoretical part of the paper we discuss both these forms of strategic pricing, linked to adiscussion on continuous and discontinuous economies of scale regarding costs of production.Detailed data on bids and bidders in Swedish tenders of railway services are then analyzed. About 30tenders taking place between 1992 and 2003 are included, checking for cases of very low and highbids and other types of deviation within the data material. Among the early results, based upon thisrather limited data set, we find that big firms like SJ and Connex tend to place either the lowest or thehighest bid when participating in tenders. Connex’ bids generally deviate more from the average bidlevel than the bids from other firms. More data from Sweden and other countries is needed to makefurther analyses and hypothesis testing applicable. The scarcity of data is in itself an interesting resultof the study, since it is caused by efforts of the procuring authorities to protect the “secrets” of thebidders. We argue that this is against the competition policy of the European Union and may harm thetendering process and industry development.
Year of publication: |
2005
|
---|---|
Authors: | Alexandersson, Gunnar ; Hultén, Staffan |
Saved in:
freely available
Saved in favorites
Similar items by person
-
The Swedish Railway Deregulation Path
Alexandersson, Gunnar, (2008)
-
The complexity of market structure – prospects for on-the-track competition in Sweden 1
Alexandersson, Gunnar, (2009)
-
Alexandersson, Gunnar, (2007)
- More ...