Maintaining competition in recurrent procurement contracts: a case study on the London bus market

Under recurrent procurement, the awarding of a contract to afirm may put it in an advantageous position infuture tenders, which may reduce competition over time. The objective of this paper is to study the dynamics ofcompetition for tendered contracts, focusing on factors that may generate incumbent advantage. Particularattention is given to learning economies, sunk costs of entry and switching costs for the procurer. The paperthen applies these insights to analyse empirically the evolution of competition in the market for local busservices in London.