REGULATION OF INTERCITY BUS FARES: THE PROBLEM OF COST ANALYSIS

EXISTING PRACTICES ARE DESCRIBED IN THE REGULATION OF BUS FARES AND DEFECTS IN THE SYSTEM DISCUSSED. IT IS ARGUED THAT BUS TRANSPORTATION HAS THE MAIN CHARACTERISTICS OF A NATURAL MONOPOLY, AND THAT THE APPROPRIATE REMEDY LIES IN IMPROVED REGULATION RATHER THAN IN A GREATER RELIANCE ON THE FORCES OF COMPETITION. STATISTICAL ANALYSIS IS EMPLOYED TO PROVIDE A SIMPLE MEANS FOR JUDGING THE REASONABILITY OF THE COST DATA SUBMITTED TO REGULATORY AGENCIES IN INTERCITY BUS LINES. DIFFERENTIATION IS MADE BETWEEN PASSENGER FARES AND FREIGHT TRAFFIC RATES. IT IS SUGGESTED THAT REGULATORY AGENCIES AND COURTS SHOULD RECOGNIZE THAT BUS LINES MAY EXPERIENCE LEGITIMATE VARIATIONS IN OPERATING EXPENSES WHICH CANNOT BE AUTOMATICALLY OFFSET THROUGH A UNIFORMLY APPLIED FLOOR STRUCTURE. MULTIPLE REGRESSION ANALYSIS IS SUGGESTED AS A GREAT IMPROVEMENT OVER THE RATIO ANALYSIS. THE DERIVATION IS DESCRIBED OF A STATISTICAL COST FUNCTION FOR MOTOR CARRIERS OF PASSENGERS. THE REGRESSION COEFFICIENTS REPORTED PROVIDE A ROUGH GUIDE OF WHAT TO EXPECT, ENABLING THE REGULATORY AGENCY TO FOCUS ON A RELATIVELY SMALL NUMBER OF CARRIERS. A THOROUGH INVESTIGATION COULD BE UNDERTAKEN OF THE PRACTICES AND THE COUNTS OF THE CARRIERS WITH SUSPICIOUSLY HIGH COSTS OR THE REQUESTED INCREASE COULD BE DENIED UNTIL THE CARRIERS IN QUESTION PRESENT ADEQUATE EVIDENCE THAT THEIR REPORTED EXPENSES ARE REASONABLE. THIS WOULD SEEM TO OFFER A SUBSTANTIAL IMPROVEMENT IN THE EFFECTIVENESS OF REGULATION.

  • Availability:
  • Supplemental Notes:
    • Vol 44, No 2, PP 245-253, 1 TAB
  • Authors:
    • Yordon, W J
  • Publication Date: 1968-5

Media Info

  • Serial:
    • Land Economics
    • Publisher: University of Wisconsin Press
    • ISSN: 0023-7639

Subject/Index Terms

Filing Info

  • Accession Number: 00201592
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Mar 24 1994 12:00AM