Maintaining Competition in Recurrent Procurement Contracts: A Case Study on the London Bus Market

30 Pages Posted: 24 Feb 2017

See all articles by Elisabetta Iossa

Elisabetta Iossa

University of Rome Tor Vergata; IEFE Bocconi University; Centre for Economic Policy Research (CEPR)

Michael Waterson

University of Warwick - Department of Economics

Date Written: February 24, 2017

Abstract

Under recurrent procurement, the awarding of a contract to a firm may put it in an advantageous position in future tenders, which may reduce competition over time. The objective of this paper is to study the dynamics of competition for tendered contracts, focusing on factors that may generate incumbent advantage. Particular attention is given to learning economies, sunk costs of entry and switching costs for the procurer. The paper then applies these insights to analyse empirically the evolution of competition in the market for local bus services in London.

Keywords: Dynamic Competition, Procurement and Incumbent advantage

JEL Classification: L24, L92, L40.

Suggested Citation

Iossa, Elisabetta and Waterson, Michael, Maintaining Competition in Recurrent Procurement Contracts: A Case Study on the London Bus Market (February 24, 2017). CEIS Working Paper No. 400, Available at SSRN: https://ssrn.com/abstract=2923305 or http://dx.doi.org/10.2139/ssrn.2923305

Elisabetta Iossa (Contact Author)

University of Rome Tor Vergata ( email )

Via Columbia n.2
Rome, 00133
Italy

IEFE Bocconi University ( email )

Via Roentgen 1
Milan, Milan 20136
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Michael Waterson

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

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