EVALUATION OF COMPETITION IN THE BRITISH LOCAL BUS INDUSTRY

The British local bus industry has been organized as a system of strictly regulated route monopolies for more than 50 years. Suggestions that this monopoly is undesirable have prompted a critical appraisal to determine the economically optimal market structure. Contained in this paper is an analysis that concurs with the common view that competitive stimulus can result in lower-cost operation. The analysis concludes that a reduction in cross-subsidy, caused by competition on the more profitable routes and timings, will be beneficial. This result arises because cross-subsidy currently disguises some loss-making services that are provided needlessly, and is also an economically inefficient way, vis-a-vis direct subsidy, of funding unremunerative bus services. However, the analysis concludes that the current United Kingdom government's solution to this, of permitting competition between bus companies "on the road," is also undesirable. This is because direct competition is liable to result in short-term waste and will not a priori lead to optimum provision in the long run. In addition, it can cause problems by severing demand- and supply-side linkages and increasing the chance of unacceptable driving and maintenance standards. Therefore, the institutional problem addressed in this analysis is how to obtain the long-run benefits without the costs of unfettered competition on the road. This would indicate that, in the bus industry, competition for the market, rather than in it, is required. The analysis concludes that for an effective potential competition in the bus industry to exist, a regulated system with low entry barriers such as franchising or contracting of services should result.

• Record URL:
  • http://onlinepubs.trb.org/Onlinepubs/trr/1986/1064/1064-001.pdf
• Summary URL:
  • https://scholar.google.com/scholar_lookup?title=EVALUATION+OF+COMPETITION+IN+THE+BRITISH+LOCAL+BUS+INDUSTRY&author=I.+Savage&publication_year=1986
• Availability:
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• Supplemental Notes:
  • Publication of this paper sponsored by Committee on Public Transportation Planning and Development. Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved
• Authors:
  • Savage, Ian
• Publication Date: 1986

Media Info

• Media Type: Print
• Features: Figures; References; Tables;
• Pagination: p. 1-10
• Monograph Title: Transit planning and operations: issues and options
• Serial:
  • Transportation Research Record
  • Issue Number: 1064
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Bus transit; Competition; Cross subsidization; Demand; Economic benefits; Market research; Monopoly; Operating costs; Supply
• Uncontrolled Terms: Supply and demand
• Geographic Terms: United Kingdom
• Old TRIS Terms: Bus transportation (Intracity)
• Subject Areas: Economics; Finance; Highways; Planning and Forecasting; Public Transportation; I72: Traffic and Transport Planning;

Filing Info

• Accession Number: 00474190
• Record Type: Publication
• ISBN: 309040582
• Files: TRIS, TRB
• Created Date: Oct 31 1987 12:00AM