A Law of Large Numbers: Bidding and Compulsory Competitive Tendering for Refuse Collection Contracts
- Cite this article as:
- GóMez-Lobo, A. & Szymanski, S. Review of Industrial Organization (2001) 18: 105. doi:10.1023/A:1026545306923
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In this paper we investigate the relationship betweencosts and number of bidders for U.K. local authorities'refuse collection contracts. We find that a highernumber of bids is associated with a lower cost ofservice. This finding, as well as being an importantempirical verification of standard proposition inauction theory, has important policy implications. TheU.K. Labour government elected in 1997 has abolishedCompulsory Competitive Tendering (CCT). Our findingsindicate that this would increase local authorities'expenditure in refuse collection.