Evaluate Public Transport Governance: Should Urban Authorities Contract with One or Several Operators ?

Evaluate Public Transport Governance: Should Urban Authorities Contract with One or Several Operators ?


W Roy, Y Croissant, L Baumstark, Laboratoire d'Economie des Transports (LET), FR


This paper aims at studying the operating cost levels of the urban public transport supply in France. The consequences of a fragmentation (allotissement) of the networks are listed and estimated (cost function).


In France, 90% of the urban authorities use to delegate the production of public transport services to a single operator. And the last 10% carry on a direct management (régie municipale). The coexistence of several operators is very uncommon, while several European cities work with more than one partner. Those local authorities (London, Stockholm?) have chosen a geographical fragmentation, an horizontal separation, or a vertical disintegration. It is never the case in France.
At the same time, we observed a strong concentration of the sector in France (the three main groups hold 75% of market share) for 20 years. The number of bidders is now dramatically low for an usual call for tender. Competition is lifeless, and most of the commentators do not predict an improvement in the future.
In order to increase competitive pressure, one of the possibility is to divide the big networks into attractive and accessible parts. This option is already tested in Europe and seems to have several advantages. The purpose of this paper is to present an evaluation of the benefits and costs of such a fragmentation.
Firstly, we estimate a cost function in order to obtain an econometric measure of the economies of scale and scope in the public transport industry. In this aim, we ran a panel data provided by the CERTU (ministerial agency), that gathers the large results of an annual survey between 1995 and 2002. We opted for a translog specification with several control variables. Secondly, we present the main determinants of the transaction costs and the gains associated with more competition within the sector. Those two groups of costs and benefits are more globally evaluated, according to the data available.


Association for European Transport