Norwegian counties that have put local public transport services out for competitive tendering have different employment protection provisions. I map the differences and bring neoclassical economy and neo-institutional theory into a discussion on how employment protections affect cost efficiency, and thereby indirectly cost of fares and level of service. I argue that the neoclassical school does not have the proper measures to consider the importance of employment protection. Only a neo-institutional approach which adds the dimension of time, provides an appropriate explanation as to how employment protection regulations affect cost efficiency. Moreover, I argue that such a comparison is useful within a country. However, a cross-country study of how employment relations affect cost efficiency gained by competitive tendering should also take other aspects such as wages into account. (Author/publisher)
Abstract