Young Researchers Seminar 2011

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Domenic Williams
3 years ago
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What are buyers of transport of patients?
What is one of the exempt cities in Norway?
What is the main industry that the Norwegian taxi industry is involved in?

1 Young Researchers Seminar 2011 Young Researchers Seminar 2011 DTU, Denmark, 8 10 June, 2011 DTU, Denmark, June 8-10, 2011 Competitive tendering in an entry regulated market an accident waiting to happen? Jørgen Aarhaug Institute of Transport Economics

2 Introduction Hypothesis The Norwegian taxi industry Changing regulations Expectations from theory Empirics and solutions Conclusion 2

3 Hypothesis Competitive tendering => lower price and better service Competitive tendering => lower price and lower service Competitive tendering => an unsustainable industry 3

4 The Norwegian taxi industry Ca 9000 taxis employing about Fragmented ownership One license per vehicle and one vehicle per person as a rule Public contracts dominate in rural areas Most vehicles are affiliated to a dispatcher and most dispatchers are owned by license holders 4

5 Regulation Two regulatory regimes, normal and exempted cities Exempted cities includes (from south to north): Fredrikstad, Oslo, Drammen, Kristiansand, Stavanger, Bergen and Trondheim Exempted areas population 2,2 million, and 4517 taxis (restricted counted as a half) The normal regime pop 2,6 million and 3306 taxis 5

6 Regulation ii Normal Exempted Cities Entry regulation Yes Yes Price regulation Yes No Competition within the taxi industry No (with some exemptions) Yes Compulsory DC affiliation No Yes (but some exemptions exist) 6

7 Key organizations and responsibility Organization Ministry of Transport and Communications (MTC) Responsibility Overall responsibility Stipulate quality and safety requirements Market access (county line crossing) Norwegian Competititon Authority (NCA) County Governments (CG) (19) licensing Enforces the Norwegian Competition Act Regulates fares in areas with maximum fare Regulating the taxi service industry in each county, Market access 7

8 Key organizations and responsibility ii Health corporations, buyers of transport of patients (tendered) County governments, buyers of school transport services (mostly tendered), and transport services (for disabled) Municipalities, buyers of special transport (pre-school, institutions etc), does need-tests for special transport for the disabled. 8

9 Changes in regulation Competition without price regulation was established in the largest cities (2000-) Trend of growing use of competitive tendering in public procurement of taxi services In 2004 responsibility for the hospitals was moved from the counties to health corporations Competitive tendering was introduced for taxi services in parallel with the transfer of responsibility 9

10 Expectations from theory Competitive tendering Is in essence a form of auctions Potential operators bid for a contract Price = wtp for the operator with the second highest wtp Prices should fall if there are two or more competitors (two will be a special case) and the competition is organized properly 10

11 Empirical findings Usually one bid per tendered contract (in rural areas) Prices vary Few complaints on new operators Few exits from the industry 11

12 Field solutions There are large fixed costs associated with doing dispatching and planning(compared to the economies of the actors) Transfer responsibility for this service from the taxi dispatchers to the health corporations and school authorities Problems with large and overly complicated contracts Simplify the contracts The existence of such solutions indicate that there is an underlying problem 12

13 Conclusion Competitive tendering in an entry regulated market Can it work? Yes, but so far it has not (looking at rural areas) Lower prices and lower standards? Little support Unsustainable regulations Possibly, but so far little competition and no deteriorating service levels 13

Regulating the taxi industry: a literature survey with focus on Norway

Summary: Regulating the taxi industry: a literature survey with focus on Norway TØI report 646/2003 Author: Jon-Terje Bekken Oslo 2003, 41 pages Background and problem In recent years, the taxi industry

Young Researchers Seminar 2011

What are buyers of transport of patients?

What is one of the exempt cities in Norway?

What is the main industry that the Norwegian taxi industry is involved in?