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Incompleteness and clarity in bus contracts: Identifying the nature of the ex ante and ex post perceptual divide

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  • Hensher, David A.

Abstract

In the transport sector, many types of contracts exist. Some are very precise, and strive for completeness; others are very [`]light-weight' and are incomplete. Bus and coach contracts, won through competitive tendering or negotiation, are typically incomplete in the sense of an inability to verify all the relevant obligations, as articulated through a set of deliverables. This paper draws on recent experiences in contract negotiation, and subsequent commitment in the bus sector, to identify what elements of the contracting regime have exposed ambiguity and significant gaps in what the principal expected, and what the agent believed they were obliged to deliver. We develop a series of regression models to investigate the extent of discrepancy between the principal and the agents perceived [`]understanding' of contract obligations. The empirical evidence, from a sample of bus operators, is used to identify the extent of perceived incompleteness and clarity across a sample of bus contracts. A noteworthy finding is the important role that a trusting partnership plays in reducing the barriers to establishing greater clarity of contract specification and obligations, and in recognition of the degree of contract completeness.

Suggested Citation

  • Hensher, David A., 2010. "Incompleteness and clarity in bus contracts: Identifying the nature of the ex ante and ex post perceptual divide," Research in Transportation Economics, Elsevier, vol. 29(1), pages 106-117.
  • Handle: RePEc:eee:retrec:v:29:y:2010:i:1:p:106-117
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    References listed on IDEAS

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    Cited by:

    1. Hensher, David A. & Stanley, John, 2010. "Contracting regimes for bus services: What have we learnt after 20 years?," Research in Transportation Economics, Elsevier, vol. 29(1), pages 140-144.
    2. George Hendrikse & Patrick Hippmann & Josef Windsperger, 2015. "Trust, transaction costs and contractual incompleteness in franchising," Small Business Economics, Springer, vol. 44(4), pages 867-888, April.
    3. Canıtez, Fatih & Çelebi, Dilay, 2018. "Transaction cost economics of procurement models in public transport: An institutional perspective," Research in Transportation Economics, Elsevier, vol. 69(C), pages 116-125.
    4. Merkert, Rico & Hensher, David A., 2013. "Regulation, trust and contractual incentives around transport contracts – Is there anything bus operators can learn from public air service contracts?," Research in Transportation Economics, Elsevier, vol. 39(1), pages 67-78.
    5. Akse, Ruben & Veeneman, Wijnand & Marchau, Vincent & Ritter, Simone, 2023. "Governance of uncertainty in implementing mobility innovations: A comparison of two Dutch cases," Research in Transportation Economics, Elsevier, vol. 98(C).
    6. Nayan, Ashish & Wang, David Z.W., 2017. "Optimal bus transit route packaging in a privatized contracting regime," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 146-157.
    7. Hrelja, Robert & Rye, Tom & Mullen, Caroline, 2018. "Partnerships between operators and public transport authorities. Working practices in relational contracting and collaborative partnerships," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 327-338.

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