transport economics - deregulation of transport
Introduction to Deregulation & Transport
What is "de-regulation"?
Deregulation is the removal of controls imposed by governments on the operation of markets, particularly taking away barriers to entry.
Opening up of markets to competition can be achieved by:
· Allowing many companies to operate one route
· Introducing heavy penalties for price fixing cartels or predatory pricing
· Short franchises encourage low fares but are a disincentive to long-term investment in infrastructure and rolling stock. See contestability theory.
The criteria to evaluate the performance of bus companies include fares, the number of services, service frequency, quality of service, changes in demand, loading, number of vehicles and their quality
Experience of deregulation in the UK Bus industry
Deregulation of the local bus market has resulted in an initial increase in competition with more buses resulted in
· Benefits: More entrants, more frequent services and lower fares
o more buses operating below full capacity ie a fall in loading
o adding to existing congestion
o increasing pollution especially in crowded city centres
· Eventual consolidation through mergers has created an oligopoly (First Group, Stagecoach, Go-Ahead, Arriva and National Express) resulting in higher fares, lower levels of service and the withdrawal of marginally commercial routes
· Many regions now have a monopoly local bus company
For a complete guide to Transport Economics, we recommend that you purchase our latest Q&A Revision Guide on Transport. Recently extended and updated, the Transport Q&A Guide provides answers to all the questions that can be asked about Transport Economics in your exams. Click here for more detail
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