Competition effects of intercity bus tendering reforms in Spain

Abstract

Spain operates a 'competition for the market' system to award the regulated monopoly rights to run intercity bus services across its different regions. Such tendering system has undergone different changes since 2007. We assess the impact of those changes on different outcomes of the auctions, such as participation, submitted prices and frequencies, as well as on outcomes of the whole process in terms of prices and frequencies offered to final consumers. The results show that the design of the terms of tender can significantly modify the conditions under which bus services are operated. The weight given to price bids in the score function is shown to be a relevant variable to increase competition for the market.