lable at ScienceDirect

Utilities Policy 17 (2009) 166–175

Contents lists avai

Utilities Policy

journal homepage: www.elsevier .com/locate/ jup

Auction procedures and competition in public services: The caseof urban public transport in France and London

Miguel Amaral a,*,1, Stephane Saussier b, Anne Yvrande-Billon a,2

a Centre d’Economie de la Sorbonne, University Paris I, 106-112 Boulevard de l’Hopital, 75013 Paris, Franceb Institut d’Administration des Entreprises, University Paris I, 21 rue Broca, 75005 Paris, France

a r t i c l e i n f o

Article history:Received 23 March 2007Received in revised form21 October 2007Accepted 30 July 2008

JEL classification:H0H7K00L33

Keywords:Public servicesTransportationFranchise biddingPublic–private partnershipsCollusionCorruptionAuctions

* Corresponding author. Tel.: þ33 (0) 1 53 55 28 00E-mail addresses: Miguel.Amaral@univ-paris1.fr

v-paris1.fr (S. Saussier), yvrande@univ-paris1.fr (A. Yv1 Tel.: þ33 (0) 1 44 07 83 21; fax: þ33 (0) 1 44 072 Tel.: þ33 (0) 1 44 07 83 23; fax: þ33 (0) 1 44 07

0957-1787/$ – see front matter Crown Copyright � 2doi:10.1016/j.jup.2008.07.006

a b s t r a c t

In many countries, governments are pushing for the introduction of competition in the organization ofpublic services and more broadly in public procurement. The development of public–private partner-ships throughout the world is a good illustration of this trend. In order to foster competition, competitivetendering through the use of auctions is now common. Nevertheless, competition for the field must beorganized. Depending on the rules of the game chosen, introducing competition for the field may or maynot be successful. In this paper we investigate two alternative models for organizing local public services,namely the French and the London models of urban public transport. Few competitors and collusivebehaviours, with increasing costs, characterize the French model, while the London model, as far as wehave seen, exhibits better results, by using the transparency of auction procedures and the discretionarypower of the regulator as two complementary instruments to foster competition and prevent anti-competitive behaviours.

Crown Copyright � 2008 Published by Elsevier Ltd. All rights reserved.

1. Introduction

In many countries, governments are pushing for the introduc-tion of competition in the organization of public services and morebroadly in public procurement (Armstrong and Sappington, 2006).The development of public–private partnerships around the worldis a good illustration of this trend. In order to foster competition,competitive tendering through the use of auctions is now commonand the European Union is seeking to introduce directives toencourage the use of competitive tendering procedures in membercountries. The objective of using auction procedures is to replacecompetition in the field by competition for the field, leading privateoperators to operate public services at a competitive price withoutloss of quality.

Nevertheless, theoretical developments have taught us that thisintuition behind the use of tendering procedures is in many

; fax: þ33 (0) 1 53 55 27 01.(M. Amaral), saussier@uni-rande-Billon).83 20.83 20.

008 Published by Elsevier Ltd. All

respects too simple, notably because such procedures are notimmune to corruption and/or collusion. In fact, the use ofcompetitive tendering does not assure intense ex ante competitionbut rather it could be associated with a small number of competi-tors depending on the way it is organized. Furthermore, when thenumber of competitors increases, the incentive to corrupt thepublic authorities is greater so that there is no certainty thatcompetition ‘‘kills’’ corruption and collusion (Bliss and Di Tella,1997). That is why competition for the field must be organized.Depending on the rules of the game, introducing competition forthe field may or may not be successful.

When it comes to the organization of public services throughpublic–private partnerships, collusion and corruption behaviourshave been widely studied, especially in less developed countries(see for example Engel et al., 2006; Guasch, 2004 for empiricalevidences). However, developed countries are not spared. Theannual global corruption barometer3 published by TransparencyInternational points out the disparity among European countries.France ranks 18th in the world with a corruption index of 7.4 out of

3 http://www.transparency.org.

rights reserved.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175 167

10, while other European countries rank even lower. For instancePoland, Greece and Italy rank 63rd, 54th and 45th, respectively,with corruption indexes of 3.7, 4.4 and 4.9. This is confirmed by datacollected by the World Bank measuring the control of corruption(Kaufmann et al., 2006). Collusion behaviours, that reflect anotherstrategy to bypass competition, are also present and difficult tocontrol by the Competition Commissions. Few data and measuresexist. Even so, several cases appear regularly and are condemned(see Albano et al., 2006 for empirical evidences concerning Europe).More problematic is the fact that, depending on the way compe-tition is organized and on other exogenous parameters, collusionand corruption could go hand in hand, suggesting that whencorruption of public entities exists, it may help sustain collusionstrategies (Lambert-Mogiliansky and Sonin, 2006).

To illustrate the importance of the way competition for the fieldis organized, we study the case of urban public transport services inLondon and France.4 Both London and France are characterized byan obligation to organize tendering procedures for local publicservicesdthis is even called an anti-corruption requirement inFrance. The French case is interesting because it clearly illustratesthat the rules of the game imposed on competitors are crucial andmay not foster competition nor prevent anti-competitive behav-iours (the three main operators in urban public transport in Francewere condemned by the French Competition Commission in July2005 to pay more than 12 million Euros for collusive strategies).Using data on the organization of bids and their results in terms ofcost and competition, we suggest that several mechanisms exist,which may explain the differences observed between France andLondon in terms of performances. More precisely, we show that theauction procedure chosen in London is the combination of trans-parent procedures (to prevent corruption and provide incentivesfor private operators to bid), discretionary power of the regulatorand incentives for private operators to participate (bids are orga-nized on a route-by-route basis in order to encourage the partici-pation of many competitors and hence prevent collusive strategies).We then point out that these characteristics of the Londontendering procedure are a key determinant of the performancedifferential observed between France and London.

The paper is organized as follows. We first recall the theoreticaldevelopments concerning the efficiency of the tendering procedurewhen collusion and corruption are crucial issues (Section 2). Wethen present the French and London bus tendering models (Section3) followed by an analysis of their performance (Part 3). Wecontinue with a discussion of the results and a conclusion.

5 This point is well known and recognized by the French Competition Authority,and is stressed in its Decision no. 00-A-25, 20 November 2000. The Authority

2. Transparency, discretion and degree of competitiveness:a brief survey

With the development of competitive tendering in publicservices industries, the performance of public procurementprocedures with respect to the promotion of competition has givenrise to a rapidly growing amount of economic literature. Thisliterature mainly stresses the incidence of auction design. Lessdeveloped are the determinants of collusion and corruption inpublic auctions. However, as argued by Klemperer (2002), collusionbetween bidders should be a major concern for auction designers.Moreover, as shown by Lambert-Mogiliansky and Sonin (2006),corruption and collusion often go hand in hand. A complete reviewof such determinants is beyond the scope of this article. Our

4 We limit our analysis of the English urban transport sector to London becausein the rest of the country, urban public transport activities are deregulated. Alter-natively, for the French case, we do not include Paris in our data because urbantransport in this city is operated by a public entity and subject to a particular lawregime.

objective in this section is to focus instead on the competitiveeffects of a few of the crucial aspects of procurement procedures,namely the transparency of the procedure, the level of discre-tionary power of the auctioneer and the degree of competitivenessof the environment.

2.1. Transparency of the procedure

The first difference between auction procedures is their level oftransparency. Transparency refers to the ability of bidders to knowand understand the actual processes by which contracts areawarded. Hence, a transparent procedure implies both that theaward criteria are clearly and objectively defined and that a recordof the award process is easily accessible. Transparency of procure-ment processes has an ambiguous effect on competition andfavouritism.

Indeed, on the one hand, a lack of transparency regarding theselection criteria and the attribution rules may discourage potentialnew entrants to participate as it is a source of great uncertainty(Zupan, 1989; Baldwin and Cave, 1999; Bajari et al., 2008). More-over, opacity may increase risks of capture and favouritism andtherefore facilitate corruption (Caillaud, 2001).

On the other hand, as pointed out by Stigler (1964, p. 48), ‘‘thesystem of sealed bids, publicly opened with full identification of eachbidder’s price and specification is the ideal instrument for the detectionof price-cutting. collusion will always be more effective against buyerswho report correctly and fully the prices tendered to them’’. Thus,transparency of procurement processes may facilitate collusionsince partners can promptly identify and punish defecting firms.

As pointed out by Albano et al. (2006), a fully opaque disclosurepolicy, which hides all information from bidders, would makecollusion difficult to sustain. However, procurement agenciesgenerally operate on behalf of the public and they simply cannotafford a fully opaque disclosure policy. This would strengthen therisk of corruption. This may explain why most of the empiricalliterature highlights that procuring authorities usually choose torely on transparent procedures (see, for instance, Domberger et al.,1986, 1987; Domberger and Rimmer, 1994), although the degree oftransparency may significantly differ among countries. Thus, asemphasized by Lambert-Mogiliansky and Sonin (2006, p. 900),‘‘measures aimed at combating favouritism can facilitate collusion andvice versa’’.5 Furthermore, a partial disclosure policy is practicallyequivalent to a fully transparent one (Albano et al., 2006). Thissuggests that, because a fully opaque disclosure policy is impos-sible, a fully transparent one may be a good way to preventcorruption. Other instruments should then be used to preventcollusion behaviours, if necessary.6

2.2. Discretionary power of public bodies

It is widely recognized that, in public procurement, whensome of the important dimensions of the trade relationship arenon-contractible, this generates major risks for opportunisticbehaviour and may lead to an inefficient outcome for a buyer.Manelli and Vincent (1995) or Bajari and Tadelis (2001), forinstance, show that in the presence of non-contractible qualitative

suggests that there might be an optimal level of transparency and defends theFrench position consisting in retaining the information concerning non-winningbids. This is not the position retained in London, as we will see.

6 One should keep in mind that such a transparent policy would foster compe-tition and increase the number of potential bidders. With an increase in bidders,collusion strategies are more difficult to sustain. We will come back to this issuelater.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175168

aspects, auctioning leads selecting firms to produce goods at thelowest cost but with the lowest level of non-contractible quality.In such a context, allowing a public buyer to exercise his discre-tion to exclude dubious providers ex ante and/or punish oppor-tunistic suppliers ex post is seen as desirable and efficient,especially in repeated procurement (Kim, 1998; Doni, 2006; Cal-zolari and Spagnolo, 2006). In a context of frequent contracting,limiting participation by introducing a pre-qualification stage7 forinstance and/or by providing credible threats of exclusion duringcontract execution would indeed encourage firms to respect theirreputational commitment to high non-contractible quality. As putby Compte et al. (2005, p. 9), ‘‘a common justification for [discretionover the selection process8] is that there may be quality concern overthe way the contract will be handled, and that the bureaucrat maybetter assess the relative quality of each firm’s offer’’. In the samevein, one can add that allowing the public buyers certaindiscretion may prevent the adverse effects of the winner’s curseas it gives them the right not to select over-optimistic or appar-ently aggressive offers. More broadly, discretionary rules inprocurement laws and guidelines can be motivated by theconsideration that they allow the intervening auctioneer to clearup ambiguities.

Several arguments in favour of discretion in public procurementauctions can therefore be found in the literature. At the same time,however, the literature on procurement also includes worksrevealing the adverse effects of discretion. First, if discretion surelyfacilitates the enforcement of non-contractible quality standards asmentioned above, it is, however, likely to induce collusion. Usingdiscretion to reduce the potential number of trading partners and/or hinder an unfaithful contractor indeed encourages and facilitatescollusive behaviours between the selected suppliers. The choice ofa level of discretionary power hence recalls a rather general trade-off between enforcement of non-contractible quality and collusion(Calzolari and Spagnolo, 2006).9

Moreover, another important risk associated with the pres-ence of discretion over the allocation process is corruption. Asshown by Burguet and Che (2004) for instance, the more anauctioneer is able and willing to manipulate his evaluation ofcontract proposals in exchange for bribes, the more corruptionhinders the efficient allocation of resources. In other words, theinefficiency cost of corruption increases with the auctioneer’sdiscretionary power, whether corruption translates into favouri-tism as in Burguet and Che (2004) or whether it results inmaking collusion sustainable as in Lambert-Mogiliansky andSonin (2006) or Compte et al. (2005). These authors indeed showthat corruption, defined as self-interested abuse of discretion toextract rents, provides a mechanism to enforce collusion. There-fore, depending on the form of discretion (e.g. providing theopportunity to resubmit, not choosing the lowest-bidding firm,restricting the number of participants, etc.), one might expectcollusion and corruption to go hand in hand in public procure-ment instead of the classical trade-off between collusion andcorruption.

One important thing to note is that the drawbacks associatedwith the discretionary power of public bodies might be reducedwith fully transparent auction procedures and fully transparent ex

7 Developments in multidimensional auction theory provide interesting insightsto this issue (see Che, 1993; Cripps and Ireland, 1994; Branco, 1997). In particular,Branco (1997) shows that, with bidders cost correlated, a two-stage bid evaluationsystem, where the quality is negotiated after the winner have been found, maysecure high levels of non-contractible quality.

8 What the authors have in mind is a common form of discretion in which thebureaucrat is allowed to choose a firm even if its offer was not the lowest.

9 As will be discussed later, few quality-related aspects are non-contractible inthe urban transport public service.

post evaluations of the performance of private operators. Thediscretionary power of public bodies could then be viewed as oneinstrument to prevent collusion, counterbalancing the trans-parency of the procedure aiming at preventing corruption. Trans-parency of the procedure and discretionary power of public bodiesmight then be viewed as complementary instruments to organizecompetition for the field.10

2.3. Degree of competitiveness of the environment

The objective of using auction procedures is to replace compe-tition in the field by competition for the field. The intuition is thatan increase in competition (i.e. in the number of bidders) shouldencourage more aggressive bidding, so that, in the limit, as thenumber of bidders increases, prices decrease towards efficiencyprices (Holt, 1979; McAfee and McMillan, 1987). It is even arguedthat in public procurement auctions attracting additional entriesmight be a priority ‘‘since the informational demands for computingoptimal mechanisms are substantial and the computation involved arecomplex, it is often worthwhile to devote resources to expanding themarket than to collecting the information and making the calculationsrequired to figure out the best mechanism’’ (Bulow and Klemperer,1996, p. 180).

The classical hypothesis according to which increasing compe-tition yields lower prices, which only holds true for private valueauctions (Hong and Shum, 2002)11, also suggests that the degree ofcompetitiveness of the environment affects the probability ofcollusion and corruption. It is indeed assumed, and theoreticallyfounded that the higher the number of bidders, the lower the risk ofcollusion (Porter and Zona, 1993).

The theoretical effect of competition on corruption is never-theless more ambiguous. Indeed, the conventional wisdom is thatincreased competition leads to lower corruption since it reducesrents. The presumption is that no bribes can occur in marketswhere perfect competition prevails, that is where there are noexcess profits from which to pay the bribes. To put it differently,‘‘less competition means firms enjoy higher rents, so that bureaucratswith control rights over them [.] have higher incentives to engage inmalfeasant behaviours’’ (Ades and Di Tella, 1999, p. 982). However,on the other hand, less competition also means that it is morevaluable for the public to avoid corruption and therefore that thereis a greater incentive for a regulatory response (Bliss and Di Tella,1997; Laffont and N’Guessan, 1999). Higher rents indeed imply thatthe public would be more apt to rewrite the bureaucrat’s contractsand spend resources trying to control them.

Thus, since the market structure affects the level of rents, it alsodetermines the level of corruption but its effect appears to betheoretically ambiguous. Empirically, however, most of the litera-ture shows that policies aimed at making markets more competi-tive play a role in controlling corruption (Celentani and Ganunza,2002).

We have yet to find a way to structure competitive tendering forpublic services that would foster competition and prevent anti-competitive behaviours. Nevertheless, these three interdependentelements, namely, the transparency of the procedure, the discre-tionary power of the public bodies and the competition levels, areat the core of the story. In any case, a large number of competitorsmight be viewed as a necessary condition to organize competitionfor the field. As this ex ante level of competition is not exogenousand is linked to how the procedure is organized, we assume that

10 The use of a transparent procedure in conjunction with high-powered publicbodies might also be a way to generate credible regulation without any rigidity,thus resolving the rigidity/flexibility trade-off of regulation.

11 See Compte (2004) for one exception.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175 169

a transparent procedure, coupled with the discretionary power ofthe public bodies, could be an efficient way to organize competitionfor the field and prevent collusion and corruption behaviours asmuch as possible.

The French and London bus tendering models illustrate thispoint.

3. The bus tendering models of London and Francedwhat arethe differences?

The bus tendering models of London and France appear as twodifferent ways of organizing competition for the field (Table 1). If, inboth models, the organization of the public service is the respon-sibility of local governments and is not centrally planned, twodifferent strategies are clearly reflected. First, London auctions takethe multiple-unit auction format, while the French model is simplya single-object auction. Indeed, the London network is unbundledand bidders can submit bids on any number of routes and routespackages, whereas in France only one operator operates eachnetwork so that bidders submit bids on an entire network. Second,the London organization is based on the existence of a regulatorwith a discretionary power counterbalanced by the fact that theselection process is transparent with an emphasis on the develop-ment of competition through the use of ‘‘small size’’ and ‘‘package’’tendering processes. The French organization is instead based ona bilateral agreement, with no regulator, and is characterized by animportant discretionary power of the local governments, a low levelof transparency and an emphasis on scale economies through theuse of a ‘‘big size’’ tendering process. In this section, we present thetwo systems before reviewing their results in Section 3.

3.1. The London model

With 800 routes serving an area of 1630 km2 and more than 3.5million passengers a day, the bus network is an essential elementfor the support of the city’s economic and social activities. Asa consequence, the operation of the London bus routes market,valued at 600 million pounds per year, has deserved particularattention, especially since the reform of 1984.

3.1.1. The 1984 reformThe regulatory framework, the contracting mode and the form of

ownership within the London bus market have all evolved over thepast 20 years as a consequence of the London Regional Transport Actof 1984. Prior to the reform launched by the Act, a publicly ownedand subsidised company provided bus operations in London, LondonTransport (LT), which had no competition. In the mid-1980s,however, it was decided that, in London, the industry should remain

Table 1Auctions procedures and objectives of the two models.

Objectives French Model London Model

Fostering competitionthrough the increase innumber of competitors

– - Smallsize auctions

- Transparencyof the process

Avoiding collusivebehaviours

- Big size auctions- Opacity of

the process- Discretionary power

of local authorities

- Discretionarypower of theregulator

- Public benchmark

Avoiding corruption – - Transparencyof the process

Exploiting economiesof scale and scope

- Big size auctions - Combinatorialauctions

regulated but that competitive forces should be introduced via a busroute tendering regime12 in order to increase efficiency and reducefinancial assistance from public funds. Consequently, in 1985, LTcreated an operational subsidiary known as London Buses Limited(LBL), which was then split into 13 locally based subsidiaries. In thesame year, LT also set up the Tendered Bus Division to begin theprocess of competitive tendering. This required LBL’s subsidiaries tocompete against operators in the private sector for the opportunityto run individual bus routes. As a step towards the reform of thesector, LBL subsidiaries were privatised in 1994. The introduction ofcompetition for the market and the involvement of the private sectorhave therefore been gradual. The first tenders took place in 1985 anduntil 1994 competition for the right to serve the market wasbetween the public sector subsidiaries of LBL and an emerging groupof private bus operators.13 In the early stages the routes available fortender were very short, they were peripheral routes requiring fewvehicles to operate so as to facilitate the entry of small independentoperators (Glaister and Beesley, 1991). Progressively, more and moreroutes became available for tender such that, by the end of 1995, halfof the network had been tendered at least once14 and, in thebeginning of 2001, all the bus miles operated were supplied throughtendered contracts.

3.1.2. The tendering process and the auction formatSince 1995, an invitation to tender is issued by the regulator

(Transport for London, TfL, the former LT) every 2 or 3 weeks so thatabout 20% of the London bus network is tendered each year. Theinvitation covers several routes, usually in the same area of London,and provides a detailed description of the service to be delivered(e.g. service frequency, vehicle type, network routes). The contractto operate each bus route is generally for 5 years, with a possible 2-year extension (Greater London Authority, 2006). The regulatorthen selects a set of pre-qualified bidders15 who are authorized tosubmit sealed bids for individual routes and/or for combinations ofroutes. Since most of the contracts are based on gross cost16, thebids must reflect an annual price for which the bidder accepts toprovide the service. The criterion for selection of a winning bid isthe ‘‘best economic value’’ meaning that the contract is awarded tothe lowest price bidder but that other qualitative factors may alsobe considered. Thus, for instance, promises of extra off-peak orSunday services or promises of new vehicles may be consideredand lead to the selection of a bidder who is not the lowest.

The auction format adopted for the London bus routes market isa variant of a combinatorial first price auction. Indeed, bidders cansubmit bids on any number of routes and route packages. Forinstance, a bidder can submit a bid on a package without submit-ting a bid on the individual routes included in the package.However, bidders cannot bid more for a single package than thesum of the stand-alone bids of that package. The auction formattherefore implies that bidders are committed by their route bids,meaning that stand-alone route bids implicitly define a package bidwith a value equal to the sum of the route bids. This rule wasmotivated by the regulator’s wish to detect and exploit economiesof scale and scope despite the fragmentation of the network. Theauction system adopted in London is therefore an attempt to reach

12 The reform was more radical outside the greater London area since nearly allbus operations throughout Great Britain were entirely privatised and deregulated.

13 National Bus Company operators, municipal operators and other privateoperators.

14 Non-tendered routes remain operated by the subsidiaries of LBL undera negotiated block grant.

15 Pre-qualified operators are selected according to their financial and operationalcapacity.

16 That is to say that the operator receives a fixed fee for the service, the revenuesfrom fares accruing to the regulator.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175170

two contradictory objectives. On the one hand, the unbundling ofthe network is expected to encourage the participation of small busoperators, and consequently to foster competition. On the otherhand, the possibility of bidding for packages of routes should makeit possible to benefit from coordination synergies and economies ofscale and scope.

3.1.3. The role of the regulatorThe regulator (TfL) has a crucial role in this model. He ensures

the proper execution of contracts and, since few routes are stilloperated by the remaining public company, he collects data onmany different aspects of the service (time schedule, drivingquality, cleaning of the buses, etc.) and benchmarks private oper-ators with their public competitor. Furthermore, the regulator hasa strong discretionary power that takes several forms. The crucialones are (1) bidders can be automatically disqualified if, shouldthey win the bid, their market share is too high and (2) incumbentbidders are explicitly preferred. The fact that incumbent bidders arepreferred sometimes leads the regulator, after reviewing the bids,to ask the incumbent for a second offer (if his offer is close to thewinning bid). This is not unusual and is clearly stated by theregulator. Furthermore, for each tender, the regulator publiclypresents all the bids and explains his final choice.17

3.2. The French model

3.2.1. A decentralized modelSince 1982, responsibility for the organization and the

management of urban public transport has been decentralized tothe local authorities18 (LAs from now on). In other words, thismeans that there is no national regulator for this sector. The LAstherefore have the authority to define the characteristics of theservice to be procured and choose the mode of organization of theirurban public transport system. More precisely, they define thenetwork route, schedules and fares as well as the amount ofsubsidies given to the sector. In each urban area, the urban publictransport services are supplied by a single operator and for a givenperiod of time. The LAs can nevertheless choose between severalmodes of organization for the procurement of these services. Theymay decide to operate the service directly, in which case theoperator is a public administration. They may also choose to dele-gate the operation to a mixed company19 (‘‘societe d’economiemixte’’) or a private one and they must then select a type ofcontractual arrangement from four main types which differ in theirrisk-sharing rules and hence in their payment schemes. In 98% ofthe cases,20 the delegation contracts are operating franchiseagreements, in which the franchisees do not own the equipment(depots, buses, etc.), invested in by the LAs. A complete descriptionof the organisational setting and contractual schemes of the Frenchurban public transport system is provided in Roy and Yvrande-Billon (2007). In a nutshell, the range of contracts21 can basically bereduced to a trade-off between cost-plus contracts (also calledmanagement contracts), under which both production and revenuerisks are borne by the local authority, and fixed-price contracts(either gross or net cost contracts), under which the operating firmsupports at least part of the risks. About 70% of local operators areprivate and are owned by three large companies, two of them

17 All information is available, tender-by-tender, on the regulator’s website.18 The local authority can be any city or group of cities. Various legal forms of

associations coexist (see GART, 2002 for more details on this institutional aspect).19 In this case, the majority of the capital stock (at least 51% and at most 82%) is

under public control.20 The remaining 2% correspond to concessions, that is to say contractual

arrangements under which the operator makes investments.21 The average duration of contracts was 8 years in 2002 (CERTU, 2003a).

private and the third semi-public. These companies, with theirrespective type of ownership and market shares in terms of numberof networks operated, are Keolis (private, 32%), Transdev (semi-public, 19%) and Veolia Transport22 (private, 22%). In addition thereis an association of small local firms, AGIR (private, 11%), and a fewindependent companies (private, 16%).23

3.2.2. The 1993 Law against corruptionUntil 1993, the legal framework did not oblige local authorities

to select their operator through a competitive tendering process. Inother words, municipalities did not have to select their provider ofpublic services by referring to objective criteria defined by law, aswould be the case in a strict competitive tendering process thatwould require to choose the bidder proposing the lowest fee fora given level of quality. Of course, the usual practice established bythe legal doctrine and the jurisprudence was to award provisioncontracts via negotiation with one operator and according to theintuitu personae principleda principle that means that localauthorities legally have the freedom to choose their operator on thebasis of mutual trust. Moreover, at that time, contracts weregranted to operators for 5-year periods and were usually renewedby tacit agreement. Therefore, before 1993, the French model oforganization of local public services was characterized by littlecompetition for the field and a great discretionary power of theauthorities.

However, following several corruption affairs, a new law (the‘Sapin’ Act) was promulgated in 1993, introducing major changes inthe institutional framework of the sector. This Act, which aimed atpreventing corruption and enhancing competition between oper-ators, has made the use of competitive tendering for delegatedmanagement compulsory and has provided explicit and detailedrules governing the attribution process. Moreover, with this law,the automatic renewal of contracts has been forbidden. However,the competitive tendering legislation has neither forbidden nego-tiation within the procedure, nor called into question the intuitupersonae principle.

3.2.3. The French auction procedureSince 1993, local public service providers are selected according

to a three-step procedure (Institut de la Gestion deleguee, 1999;CERTU, 2003b):

- Step one: pre-qualification of bidders.First, the public authority publishes a call for application in

which the service to be procured is roughly described. It thendraws up a list of candidates that may submit a bid. Theselected candidates are those able to provide financial andprofessional guarantees.24

- Step two: bids.Second, the local authority provides the pre-qualified

bidders with a consultative document which may containa more or less detailed description of the technical character-istics of the service (routes, schedules, fleet, personnel, etc.)25,some financial information (annual reports, balance sheets,etc.), as well as indications concerning the pricing conditionsand the type of contractual arrangement the local authority

22 The former name of the company was Connex.23 Source: CERTU (2003a).24 As reported by the CERTU (1997, 1998, 2003c), the most frequent cause of

rejection of an application is the absence of experience in networks of comparablesize.

25 Local authorities have great latitude in the description of the services since thelaw does not define the level of details they must provide.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Bef. 93 Sep 93 - Jul 95 Jul 95 - Dec 96 2000-01 2002-05

Averag

e n

um

ber o

f b

id

ders

0%

10%

20%

30%

40%

50%

60%

70%

% o

f ten

ders w

ith

1 b

id

der

Fig. 1. Number of bidders in France. Source: CERTU (1997, 1998, 2003c), GART (2005).

M. Amaral et al. / Utilities Policy 17 (2009) 166–175 171

intends to adopt. On the basis of the information given in thisdocument, the selected candidates make their bid.26

- Step three: negotiation and selection of the final provider.The local authority then chooses one or several bidders with

whom it enters into separate negotiations to determine thedetailed contractual terms. At the end of the negotiations, thepublic authority chooses the final provider.

What is important to underline is that local authorities are nowbound by the ‘Sapin’ Act to periodically launch an invitation totender but are not bound to select the final set of bidders or theultimate winner according to objective and precisely predefinedcriteria like the level of subsidies required by bidders. Localauthorities are neither required to mention selection criteria intheir consultative document, nor bound to rank them, if specified(Institut de la Gestion deleguee, 1999). Finally, in accordance withthe intuitu personae principle, local authorities are not obliged toadopt the rule of the lowest or even the best bid as in traditionalauctions. The current French legislation still gives them thefreedom to choose their utilities’ providers, considering that theassessment of the most suitable bidder is complex and cannot restonly on quantifiable criteria. Their selection criteria can thereforeinclude subjective elements such as the reputation of the bidder orthe confidence he inspires. This does not mean that the choice ofthe co-contractor can be totally discretionary and extraneous to thepublic interest. Legally, local authorities must to be able to justifytheir choice before unsuccessful bidders and their decision iscontrolled at the regional level. However, the justification of theirchoices is not made public for confidentiality reasons and, since theselection criteria, or the rules of the tendering game, are notprecisely defined ex ante, the motives behind their choice arehardly verifiable ex post.

The second original feature of this attribution mechanism is thatit combines two modes of selection that are usually considered assubstitutes, namely competitive bidding and negotiation (Bulowand Klemperer, 1996). The literature on procurement, in its recentdevelopments, views auction and negotiation as alternative ways toselect a provider of goods or services, each one presenting its ownadvantages and limits (Manelli and Vincent, 1995; Bajari et al.,2008). Thus, while competitive bidding is perceived to select thelowest bidder and prevent biased awarding of contracts, it mayhave some highly undesirable self-selection consequences and failto respond optimally to ex post adaptation. On the contrary, nego-tiation may lead to corruption and favouritism but it may allowlocal authorities and contractors to spend more time discussing the

26 But they can also decide not to participate. Indeed, those who are authorized tosubmit a bid are not bound to make one.

design of the contract and the characteristics of the service todeliver, therefore reducing the risk of ex post opportunistichaggling. Consequently, negotiation is advocated when the serviceis complex that is when ex post adaptations are expected, whilecompetitive tendering is the recommended awarding mechanismfor services that are simpler to describe (Bajari et al., 2008).

In fact, the two models might reveal good results concerningtheir capabilities for preventing collusion and corruption behav-iours and fostering competition (Table 1). The London process givesgood incentives for bidders to enter into the game (i.e. increasedcompetition) with safeguards implemented to prevent collusion(i.e. public benchmark; discretionary power of the regulator) andcorruption (i.e. transparency of the process). The French modelprovides fewer incentives for bidders to enter into the game, atleast for small size bidders but takes care of scale economies.Opacity of the bidding process and the size of the auctions might beconsidered as factors that help prevent collusion behaviours bydestabilizing such strategic behaviours (Albano et al., 2006) butwithout any insurance concerning ex ante competition. It is thushard to disqualify one model over the other ex ante.

4. The London and French bus tendering modelsdwhat arethe results?

We saw that the London and French models are two candidatesfor organizing competition for the field, with their own rationality.In this section, our objective is to investigate the consequences ofthese two contrasting models.

4.1. Auction procedures and the number of competitors

The first point to stress is that the level of competition shouldnot be taken as granted. It is largely endogenous, depending on therules of the game chosen to organize tenders. As we noted above,the London model is shaped to foster competition, at least toincrease the number of competitors (i.e. to provide incentives forcompetitors to bid effectively). This is not the case in the Frenchmodel.

This results in two contrasting situations. On the one hand, fewbidders and a decreasing number of bidders through time charac-terize the French case (Fig. 1). On the other hand, the London case ischaracterized by a large number of potential bidders and effectivebids (Fig. 2).

It is interesting to note that the promulgation of the ‘Sapin’ Actin France in March 1993 (i.e. the obligation for local authorities toorganize competitive tendering) had an immediate impact on thedegree of ex ante competition since the number of bidders signifi-cantly increased after 1993. Such a law can be viewed as resulting inan increase in transparency of the procedures. However, this effect

Table 2Statistics on the number of vehicle-kilometres (1000) supplied in French urbanpublic transport networks in 2006.

Size of the network Obs. Mean Std Min. Max.

Jan.95 -Dec.96

Apr 99 -Dec.2000

2003 2004 2005 20060

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Averag

e n

um

ber o

f b

id

ders

0%

10%

20%

30%

40%

50%

60%

70%

% o

f ten

ders w

ith

1 b

id

der

Fig. 2. Number of bidders in London. Source: TfL’s website.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175172

has progressively become blurred. Indeed, the number of networksreceiving only one bid has increased since 1995 and consequentlythe average number of bidders has continuously decreased.

Furthermore, from a database provided by the CERTU (2003a),we were able to evaluate the proportion of operators that werereplaced between 1995 and 2002. The results of our estimationsindicate that out of the 123 bidding procedures recorded over 7years in a sample of 165 networks, 88% have led to the renewal ofthe incumbent, that is to say 12% have translated into a change ofoperator. This must be compared with London, where only 63.5% ofincumbent contracts were renewed between 1999 and 2006.27

These results must be interpreted carefully. First, the decreasingaverage number of bidders and the high rate of incumbentrenewals in France must be related to the extent of the networksand the resulting concentration of the market. The massiveextension of the areas served by public transport (þ40% of squarekilometres between 1991 and 2002 which corresponds to anincrease of 7.5% in the population served; UTP, 2002, 2003) anda resulting increase in the volume of services supplied (þ17% ofvehicle-kilometres over the period) explains why the market hasconcentrated over the period to be dominated by three large groups(CERTU, 2000), and consequently why the potential for competitionhas been limited de facto.

Furthermore, the proportion of operators that have beenreplaced is likely to be a very imperfect indicator of the competitivepressure in the sector. We can consider that the incumbents haverenewed most of their contractual arrangements by proposingbetter bids than their competitors. Whereas it is reasonable to viewa change of operator as the result of a better bid from a new winningentrant, it is simplistic to deduce from the absence of changes thatthe tendering procedures had no effects. As already suggested, theincumbents may have faced competitive pressures during thebidding procedure and reduced the level of subsidies they asked forcompared to what they were receiving before, all else held constant.The results of the recent competitive tendering process in the city ofLyon are very illustrative of this argument. Indeed, to renew itscontract, the incumbent, Keolis, facing fierce competition froma new entrant in the area, RATP Developpement, had to reduce itsoriginal bid by 300 million euros at the negotiation stage: his finalbid was 1542 million euros, compared to the 1841 million eurosproposed at the beginning of the attribution process (Les Echos, 7–8January 2005). Unfortunately, since we do not have any informationregarding the offers made by bidders, we are not able to verifywhether there was a massive renewal among incumbents becausetheir bids were better than those of their competitors.

27 This concerns 115 renewed contracts.

However, given the low number of bidders and the increasingnumber of procedures with only one bidder, one can suspect thatincumbents did not face fierce competition and therefore wereprobably not required to considerably reduce their offers.

One could argue that the low level of competition characterizingthe French model is related to the fact that French local authoritiesorganize larger-size auctions. This argument must be qualifiedsince, as highlighted by Tables 2 and 3, the average number ofvehicle-kilometres per operator in London is higher than theaverage number of vehicle-kilometres supplied in French networks(this result holds even if we consider only French networks withmore than 250,000 inhabitants). As an example, the number ofscheduled vehicle-kilometres was 88 million for Arriva Group in2005, whereas in Lyon (one of the biggest French network), theoperator supplied less than 47 million vehicle-kilometres in 2006.

Also, the competition intensity differential between the twomodels cannot be explained by the existing differences in invest-ments responsibilities. Indeed, given that buses are mobile and thata well functioning second-hand market exists for such assets,investments are easily redeployable. Besides, the London model is,in fact, characterized by higher barriers to entry since, on thecontrary to the French model, investments in rolling stock anddepots are made exclusively by private operators.

Consequently, one can reasonably argue that the main deter-minant of the ex ante degree of competition is neither the size ofauctions nor the investments responsibilities, but rather the waylocal authorities combine transparency and discretion over theselection process.

4.2. Auction procedures and anti-competitive behaviours

In addition to reducing competition, the French rules for orga-nizing tenders also provide, indirectly, an adequate situation forcollusive behaviours to be sustained. This is no longer an interro-gation; the French model was not immune to such behaviour.A recent investigation by the French Competition Commission(Conseil de la Concurrence, 2005) revealed the existence of a cartelbetween the three leading operators, namely Keolis, Transdev andConnex, which have been imposed fines of 5% of their turnover in

Population> 250,000 22 15,643.41 9571.97 6038 46,649100,000< Population< 250,000 39 4608 2024.26 1667 10,152Population< 100,000 76 908.33 559.65 108 2511Total 137 4327.74 6537.20 108 46,649

Source: UTP (2007).

Table 3Number of scheduled bus-kilometres per operator in London in 2005.

Operator Total scheduledbus-kilometres(1000)

Operator Total scheduledbus-kilometres(1000)

Arriva Group 88,376 Metroline 62,606Go-Ahead Group 81,121 Transdev 44,341Stagecoach Group 73,459 National Express 21,477First Group 70,600 Other operatorsa (8) 20,795Average number of bus-kilometres per operator: 30,851.68

Source: Greater London Authority, 2006.a Blue Triangle Buses; HR Richmond; Docklands Minibuses; ECT Bus; Sullivan Bus

and Coach; Central Parking System of UK; CT Plus; East Thames Buses.

Table 4Evolution of the proportion of French local authorities using management contracts.

Decade 1970s 1980s 1990sAverage proportion of

management contracts100% 60% 25%

Sources: CERTU (2003a), GART (2002).

M. Amaral et al. / Utilities Policy 17 (2009) 166–175 173

France (Conseil de la Concurrence, Decision no. 05-D38, 5th July2005). The investigation, which focused on 122 market attributionprocedures organized between 1996 and 1999, discloses that thethree companies consulted each other in order to divide the marketamong them. The Competition Commission recorded that thesecompanies coordinated their bidding policy and exchanged infor-mation concerning their strategies and the bids they had alreadymade to be selected. Moreover, not only did the companiesexplicitly agree not to compete with each other, but they alsocontrolled the attribution of at least 27 markets by threateningpotential entrants that could disturb their anti-competitive game.Finally, the Commission has shown that, on several markets, thethree companies agreed either not to participate in the bid or towithdraw before the final decision by the local authorities and that,when several ring members bid, only one was a serious bidder, theothers submitting phony higher bids.

As concluded by the Commission, this anti-competitive gamehas certainly led companies to impose their price on local author-ities who consequently have had to bear higher charges than thosewhich would have resulted from a competitive functioning of themarket. One can therefore reasonably assume that the smallaverage number of bidders, the high rate of incumbent renewalsand the absence of cost reductions are at least partly due to theexistence of collusive practices.

4.3. Auction procedures and operating costs

In parallel with the way competition for the field is organized inLondon and in France, it is interesting to see how costs have evolved

2

2.5

3

3.5

4

4.5

5

90/91

91/92

92/93

93/94

94/95

95/96

96/97

97/98

Half of the network tenderedat least once

Fig. 3. Bus operating cost per vehicle-kilometre (euro at 2005 prices). The operating costreports; London: Department for Transport (2002, 2006).

over time, since the London reform (Fig. 3). Fig. 3 must be inter-preted with caution. Indeed, as the available data do not allow us tocontrol for the various determinants of cost levels (e.g. price andquality of inputs, networks’ exogenous characteristics, servicequality, etc.), we only intend to explain the evolution of costs.Nevertheless, this work proves to be fruitful.

It is indeed surprising to observe that, by the beginning of the1990s, operating costs were very similar in France and in London,but have then followed a very different trend, at least until 2001.Whereas the introduction of a tendering process in London hasbeen followed by a decrease in operating costs until 2001, in France,it is striking to observe that the introduction of the ‘‘Sapin’’ Law haschanged nothing with regard to costs. This may be due to the factthat, in London, the period 1990–2001 corresponds to theprogressive replacement of the former public firms by privateoperators while in France, operators were already private beforethe promulgation of the Law. This difference might also explainwhy, since 2001, that is once nearly all the London network wasoperated by private operators, costs have started to rise in theBritish city. In other words, the introduction of competitivetendering appears to be beneficial in terms of cost reductions if it iscoupled with private operators’ entry. If private operators are notnew entrants in the bidding game, competitive tendering seemsunlikely to lead to fierce competition for new market shares.

4.4. Contractual design and quality

The evolution of contractual design is another important aspectto explain the trend of costs, in particular the cost increase inLondon since 2001. The number of bidders, the rate of incumbentrenewals and the power of the public bodies require keeping inmind that operators are not only disciplined by market forces butalso by contractual agreements. In other words, competitivetendering is not the only device to incite operators to be efficient;

98/99

99/00

00/01

01/02

02/03

03/04

04/05

05/06

LondonFrance

All buses miles operated throughtendered contracts

s do not include operators’ profit margins. Sources: France: CERTU-GART-UTP yearly

Fig. 4. Excess Waiting Time (EWT) on High Frequency (HF) routes and % of on-time departures for Low Frequency (LF) routes. There is no precise schedule for buses on HighFrequency but there are a number of buses per hour. There is a precise schedule on Low Frequency routes. Source: Transport for London, 2005.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175174

contractual schemes as well as the distribution of property rightsmay constitute a complementary tool. What is then interesting tonote is that, since the 1970s, there has been a tremendous change inthe type of contracts chosen by French local authorities to governtheir relationship with external contractors. More precisely, asillustrated in Table 4, for three decades, the proportion of localoperators regulated by cost-plus (i.e. management) contracts hasdrastically decreased, local authorities preferring to turn to morehigh-powered incentives contracts (i.e. fixed-price contracts).

Several empirical studies dealing with the performance impactof contractual choices in utilities have demonstrated that high-powered incentive regulatory schemes (e.g. fixed-price contracts)lead to higher cost efficiency than cost-plus contracts (see forinstance Gagnepain, 1998; Gagnepain and Ivaldi, 2002; Perrigne,2002; Piacenza, 2006).

In London, the initial contracts were net cost contracts. But,since 2001, quality incentive contracts have been introduced andwill be generalized progressively. These contracts are mainly grosscost contracts with bonuses and penalties depending on theobserved quality. Furthermore, such contracts specify that therewill be an extension to the contract duration (from 5 to 7 years) ifquality indicators are good. This might explain the increase in theoperating costs observed since 2001 in London. In 2006, 635 qualityincentive contracts had already been awarded. Only 93 previousgross cost contracts remained and were to be replaced rapidly. Suchcontracts show that quality is largely contractible in urban publictransport. Furthermore, quality indeed increased in London sincetheir introduction (see Fig. 4).

5. Conclusion

In this paper we investigated two alternative models for orga-nizing local public services, namely the French and the Londonmodels in urban public transport. We highlighted the main differ-ences between the two models in relation to their propensity tofoster competition and prevent anti-competitive behaviours (i.e.collusion and corruption). Few competitors, with increasing costsand collusive behaviours, characterize the French model while theLondon model, as far as we have seen, exhibits better results, byusing the transparency of auction procedures and the discretionarypower of the regulator as two complementary instruments to fostercompetition and prevent anti-competitive behaviours. This way oforganizing competition for the field in local public services could beuseful for practitioners as well as theoreticians to undercover anefficient way to organize such public services.

Acknowledgements

We would like to thank for their financial support the FrenchMission on Law and Justice – Economic Attractiveness of Lawprogram (http://www.gip-recherche-justice.fr/aed_va.htm).

References

Ades, A., Di Tella, R., 1999. Rents, competition and corruption. American EconomicReview 89 (4), 982–993.

Albano, G.L., Buccirossi, P., Spagnolo, G., Zanza, M., 2006. Preventing collusion inprocurement. In: Dimitri, Piga, Spagnolo (Eds.), Handbook of Procurement.Cambridge University Press, pp. 347–380.

Armstrong, M., Sappington, D.E., 2006. Regulation, competition and liberalization.Journal of Economic Literature 44 (2), 325–356.

Bajari, P., Tadelis, S., 2001. Incentive versus transaction costs: a theory of procure-ment contracts. RAND Journal of Economics 32 (3), 387–407.

Bajari, P., McMillan, R., Tadelis, S., 2008 Auctions versus negotiations in procure-ment: an empirical analysis. Journal of Law, Economics and Organization,forthcoming.

Baldwin, R., Cave, M., 1999. Franchising and its limitations. In: UnderstandingRegulation – Theory, Strategy and Practice. Oxford University Press, Oxford, pp.257–285.

Bliss, C., Di Tella, R., 1997. Does competition kill corruption? Journal of PoliticalEconomy 105 (5), 1001–1023.

Branco, F., 1997. The design of multidimensional auctions. RAND Journal ofEconomics 28, 63–81.

Bulow, J., Klemperer, P., 1996. Auctions versus negotiation. American EconomicReview 86, 180–194.

Burguet, R., Che, Y., 2004. Competitive procurement with corruption. RAND Journalof Economics 35, 50–68.

Calzolari, G., Spagnolo, G., 2006, Reputation and Collusion in Procurement.University of Bologna Working Paper.

Caillaud, B., 2001. Ententes et Capture dans l’Attribution des Marches Publics. In:Cohen, D., Mougeot, M. (Eds.), Encheres et gestion publique. Conseil d’AnalyseEconomique, La Documentation Française, Paris, pp. 215–245.

Celentani, M., Ganunza, J., 2002. Competition and corruption in procurement.European Economic Review 46 (7), 1273–1303.

CERTU, 1997. Impact de l’application de la loi Sapin dans les transports collectifsurbains – Annee 1995. CERTU, Lyon.

CERTU, 1998. Impact de l’application de la loi Sapin dans les transports collectifsurbains – Annee 1996. CERTU, Lyon.

CERTU, 2000. Les grands groupes français de transport de voyageurs. CERTU, Lyon.CERTU, 2003a. Transports collectifs urbains – Evolution 1997–2002. CERTU, Lyon.CERTU, 2003b. La devolution des services publics de transport urbain Tome 1: La

delegation de service public. CERTU, Lyon. Dossier 144.CERTU, 2003c. Delegations de service public et marches publics 2000/2001. CERTU,

Lyon.Che, Y.-K., 1993. Design competition through multidimensional auctions. RAND

Journal of Economics 24, 668–680.Compte, O., 2004, Prediction Errors and the Winner’s Curse. Unpublished manuscript.Compte, O., Lambert-Mogilianski, A., Verdier, T., 2005. Corruption and competition

in procurement auctions. RAND Journal of Economics 36 (1), 1–15.Conseil de la Concurrence, 2005. Decision N�05-D-38 du 5 juillet 2005 relative a des

pratiques mises en œuvre sur le marche du transport public urbain de voya-geurs. Conseil de la Concurrence, Paris.

M. Amaral et al. / Utilities Policy 17 (2009) 166–175 175

Cripps, M., Ireland, N., 1994. The design of auctions and tenders with qualitythresholds: the symmetric case. The Economic Journal 104, 316–326.

Department for Transport, 2002. A Bulletin for Public Transport Statistics GB. DfT,London.

Department for Transport, 2006. A Bulletin for Public Transport Statistics GB. DfT,London.

Domberger, S., Meadowcroft, S., Thompson, D., 1986. Competitive tendering andefficiency: the case of refuse collection. Fiscal Studies 7 (4), 69–87.

Domberger, S., Meadowcroft, S., Thompson, D., 1987. The impact of competitivetendering on the costs of hospital domestic services. Fiscal Studies 8 (4), 39–54.

Domberger, S., Rimmer, S., 1994. Competitive tendering and contracting in the publicsector: a survey. International Journal of the Economics of Business 1 (3), 439–453.

Doni, N., 2006. The importance of reputation in awarding public contracts. Annalsof Public and Cooperative Economics 77 (4), 401–429.

Echos (Les), 2005, Transports urbains: quelle concurrence? 7–8 janvier, p. 8.Engel, E., Fisher, R., Galetovic, A., 2006. The Basic Public Finance of Public–Private

Partnerships. NBER Working Paper no. 13284.Greater London Authority, 2006. Value added? The Transport Committee’s assess-

ment of whether the bus contracts issued by London Buses represent value formoney. Greater London Authority, London.

Gagnepain, P., 1998. Structures Productives de l’Industrie du Transport Urbain etEffets des Schemas Reglementaires. Economie et Prevision 135, 95–107.

Gagnepain, P., Ivaldi, M., 2002. Incentive regulatory policies: the case of publictransit systems in France. RAND Journal of Economics 33 (4), 605–629.

GART, 2002. Les chiffres de references des transports publics. GART, Paris.GART, 2005. La passation des DSP en Transport Urbain. GART, Paris.Glaister, S., Beesley, M.E., 1991. Bidding for tendered bus routes in London. Trans-

portation Planning and Technology 15, 349–366.Guasch, J., 2004. Granting and Renegotiating Infrastructure Concessions: Doing it

Right. World Bank Institute.Holt, C.A., 1979. Uncertainty and the bidding for incentive contracts. American

Economic Review 69 (4), 697–705.Hong, H., Shum, M., 2002. Increasing competition and the winner’s curse: evidence

from procurement. Review of Economic Studies 69, 871–898.Institut de la Gestion deleguee, 1999. Negocier, gerer et controler une delegation de

service public. La Documentation Française, Paris.

Kaufmann, D., Kraay, A., Mastruzzi, M., 2006. Governance Matters v: Aggregate andIndividual Governance Indicators for 1996–2005. World Bank Policy ResearchDepartment Working Paper.

Kim, I.G., 1998. A model of selective tendering: does bidding competition deteropportunism by contractor? The Quarterly Review of Economics and Finance38, 907–925.

Klemperer, P., 2002. What really matters in auction design. Journal of EconomicPerspectives 16 (1), 169–189.

Laffont, J.-J., N’Guessan, T., 1999. Competition and corruption in an agency rela-tionship. Journal of Development Economics 60, 271–295.

Lambert-Mogiliansky, A., Sonin, K., 2006. Collusive market sharing and corruptionin procurement. Journal of Economics Management and Strategy 15 (4), 883–908.

McAfee, R., McMillan, J., 1987. Auctions and bidding. Journal of Economic Literature25, 699–738.

Manelli, A., Vincent, D.R., 1995. Optimal procurement mechanisms. Econometrica63 (3), 591–620.

Perrigne, I., 2002. Incentive regulatory contracts in public transportation: anempirical study. Working Paper. Pennsylvania State University.

Piacenza, M., 2006. Regulatory contracts and cost efficiency: stochastic frontierevidence from the Italian local public transport. Journal of Productivity Analysis25, 255–277.

Porter, R., Zona, D., 1993. Detection of bid rigging in procurement auctions. Journalof Political Economy 101, 518–538.

Roy, W., Yvrande-Billon, A., 2007. Ownership, contractual practices and technicalefficiency: the case of urban public transport in France. Journal of TransportEconomics and Policy 41 (2), 257–282.

Stigler, G., 1964. A theory of oligopoly. Journal of Political Economy 72 (1), 44–61.Transport for London, 2005. London Travel Report 2005. Transport for London,

London.UTP, 2002. Les chiffres cles du transport urbain 2001. UTP, Paris.UTP, 2003. Les chiffres cles du transport urbain 2002. UTP, Paris.UTP, 2007. Les chiffres cles du transport urbain 2006. UTP, Paris.Zupan, M., 1989. The efficacy of franchise bidding schemes in the case of cable

television: some systematic evidence. Journal of Law and Economics 3,401–456.