TMB has a greater efficiency than private operators in the Metropolitan Area of Barcelona
The magazine Journal of Policy Analysis and Management -magazine for the Association for Public Policy Analysis and Management, USA) - will soon publish a study analysing the bus passengers transport system in the Metropolitan Area of Barcelona. The article focuses on the comparison between the efficiency of public companies and private ones which work under the same jurisdiction, a system known as mixed delivery. This work has been carried out by Jordi Rosell and Germà Bel, researchers of the Research Group on Governments and Markets of the Institute for Research on Applied Regional and Public Economics (IREA) of the University of Barcelona. This is the first research analysing the public and private companiesʼ efficiency in the same field.
The magazine Journal of Policy Analysis and Management -magazine for the Association for Public Policy Analysis and Management, USA) - will soon publish a study analysing the bus passengers transport system in the Metropolitan Area of Barcelona. The article focuses on the comparison between the efficiency of public companies and private ones which work under the same jurisdiction, a system known as mixed delivery. This work has been carried out by Jordi Rosell and Germà Bel, researchers of the Research Group on Governments and Markets of the Institute for Research on Applied Regional and Public Economics (IREA) of the University of Barcelona. This is the first research analysing the public and private companiesʼ efficiency in the same field.
The first result is that the performance of the public company TMB is better than the private delivery modesʼ one, and the benefits of the public operator increase if we take into account the transaction costs in private firms (bid specifications, competitions, private operators tracking, etc.) TMB would have between 5 and 10% lower costs than the ones of private operators but having the same conditions. This means that the public company can do the same as the private one even though they have less means.
Secondly, selection via competitive tendering in private companies proves to give a lower service cost -between 1 and 1,5%- or no effect at all. Regarding this information, the results are fairly consistent with the hypothesis that stronger competitive pressures in tendering processes can result in cost reductions, mostly when we take the transaction costs into account.
“TMB performing better than private operators means there are private companies that perform worse but it doesnʼt mean TMB could not improve” says Jordi Rosell. “We have an efficient operator which is TMB and some other private operator which is also good. If we improve the competitiveness between private and public models, people can benefit from it” says Jordi Rosell. TMB has been in international competitions, such in Perpignan, and has won them. “We have to let TMB to take part in the competitions where the private companies participate, and the other way round to ensure that public and private operators compete with each other”, highlights Rosell.
According to Germà Bel, professor of Applied Economics, “there is a growing body of evidence that makes us wonder on the existence of systematic cost savings from privatization in the management of the bus passengers transport service. Regarding the competitions, they have a positive effect during the first years, but the cost savings fades away over time”. There is a competitiveness decrease among private models in both the metropolitan area of Barcelona and other neighbouring towns: “over the years, fewer companies apply for the competitions and the companies who offer the service always end up wining” says Bel.