Information disclosure and bidding structure: Evidence from the London bus market

Does providing more information impact bidding structure in repeated procurement? We empirically examine the effects on a set of bidding outcomes after provision of increased information to participants in the London bus market, using an event study approach. We find that (i) The highest bid and the lowest bid move closer; (ii) There is a lesser tendency for the incumbent to win; (iii) Firms with a nearer garage that are not incumbents have a greater chance of winning, so more routes move to new operators; (iv) However, the tendency for incumbents to win does not change when their garages are some distance from the route; and (v) Winning prices rise, other things equal, with respect to the Transport for London inflation adjuster, a factor we investigate further. These results are consistent with more information release improving bidders’ decision making and mitigating incumbents’ advantage, but additionally they led to higher prices overall. • Examines the impact of additional information in a bidding contest. • A case where the same contracts are let over successive periods. • Additional information provided leads to more contracts going to non-incumbents. • Contract price rises are examined for evidence of anticompetitive conduct.