On Two Wheels in Paris: The Vélib Bicycle-Sharing Program
Posted: 7 May 2012
Date Written: April 19, 2012
French advertising company JCDecaux and the city of Paris jointly developed Vélib, a wildly popular bicycle sharing system. Despite Vélib's public appeal, vandalism and theft led to ballooning operating costs-costs borne by JCDecaux alone. The two parties opted to renegotiate their contract, which would impact prices, revenue sharing, cost allocation, and the operation of the system as a whole. Could the parties agree on a common strategy that would meet their objectives, while still delivering a first class bicycle sharing service to the city of Paris?
Learning Objective: The case serves two primary pedagogical purposes. First, the negotiations and contractual agreements between the city of Paris and JCDecaux provide insight into issues both sides face in navigating public-private partnerships. The tasks at stake include designing contracts to align diverse objectives, handling lock-in, coming to agreement on pricing, and anticipating renegotiation strategy. Second, the case considers the unique operational challenges of providing a shared resource and explores how technological and market-based innovations can help overcome these challenges.
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