Do competition and ownership matter? Evidence from local public transport in Europe

This article investigates how the ownership and the selection procedure of firms operating in the Local Public Transport (LPT) sector affect their productivity. In order to compare different institutional regimes, we carry out a comparative analysis of 77 companies operating in large European cities over the period 1997 to 2006. This allows us to consider firms selected either through competitive tendering or negotiated procedures. Retrieving the residuals we obtain a measure of Total Factor Productivity (TFP), which we regress on firm and city characteristics. We find that totally or partially public firms display lower productivity than privately owned firms. Moreover, firms selected through competitive tendering display higher TFP.