the costs of land are higher. Land rents or the opportunity costs of land are subject to future uncertainty. The common value elements that influence all the bidders are common uncertainty about winning future contracts and common uncertainty about getting enough drivers to fulfill the contract obligations in the future.
I answer two policy questions in light of these results. First, a decrease in competi- tion caused by the merger of two city-owned bus companies may have no effects or even an reducing effect on procurement costs. Thus, from the perspective of competition, this merger decision is not open to criticism. Second, the City should not build public garages and rent them to new entrants to induce more competition. As it is not certain that the new competition brings any benefits, the City should not spend any resources to induce it. If the City chooses to pursue the proposed garage policy and must choose between two locations for which overall operating costs are equal, they should choose the garage which is more often located further away. Then at least the new entrants should react to the increased competition as planned.
1.2.2 The Determinants of Entry in an Auction with both Private and Common Value Bidders
This essay has two objectives. First, I study the determinants of entry in the City of Helsinki bus transit market. Knowing which contract and bidder characteristics affect the bid submission decisions helps the procurement agency plan the contracts to mini- mize procurement costs. My paper thus has a policy objective. Second, I contribute to the literature on endogenous entry in auctions by studying whether bidders for whom the private value aspects are relatively more important make different entry choices than those bidders for whom the common value aspects are more important. I use data from the City of Helsinki bus transit auctions to construct a set up that enables me to study how the information paradigm affects the entry choices.
As discussed above, it is known that the information paradigm makes a difference on how the amount of competition that the bidders expect to face5 affects the levels of submitted bids. It is yet to be asked in the literature whether the information