Abstract

This paper analyses the relationship between the service contract (and tender) design and the outcome of the tender in the local public tran sport. Data are collected through a survey involving about 50 territorial entities. It emerges that optimal contract (and tender) design crucially depends on the objective function of the regulator. Participation is encouraged by a semi-rigid model, by gross cost contracts, by weak incentives and by opportunity of sub-contracting. Vice versa, rebates are favoured by long duration of the contract, by strong incentives and (again) by opportunity for sub-contracting. Finally, having a new winner is favoured by strong incentives, by asset availability.