So the public transport authority stops running their own vehicles, and instead places tenders for individual routes? And anyone can bid on operating the route? I mean they already do that with subcontractors for contingencies etc.
Overwhelmingly however it's cheaper to vertically integrate, and private operators have no interest in taking low profitability routes (which can often be very important due to second order effects).
I will contend that automated busses might change things here a bit though.
> So the public transport authority stops running their own vehicles, and instead places tenders for individual routes? And anyone can bid on operating the route?
No. The public transport authority keeps doing exactly the same that it's doing now. Simply, taxi drivers can choose daily to start following a route for shared drives. Nothing else, except maybe some coordination so that the ticket price is known in advance.
In my country, any city that is profitable enough for Uber&co also already have enough buses. When you already have a bus every 5 minutes, adding the capacity of some vans will not change anything.
On a smaller bus line with less frequency than that, it will also not be really profitable for "independent" drivers.
It may be useful as a temporary solution or a local test but a public transport authority (should) have enough data to scale lines or create routes based on real usage.
When public transport are bad, it's rarelly due to the physcal constraints but always because budget is lacking. You aren't going to solve your lack of bus (drivers) by adding more vehicules with less capacity.
Overwhelmingly however it's cheaper to vertically integrate, and private operators have no interest in taking low profitability routes (which can often be very important due to second order effects).
I will contend that automated busses might change things here a bit though.