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Please use this identifier to cite or link to this item: http://hdl.handle.net/10373/380

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Title: Subsidy and Local bus service deregulation in Britain : a re-evaluation
Authors: Romilly, Peter
Affiliation: University of Abertay Dundee. Dundee Business School
Keywords: Bus services
Deregulation
Econometric model
Issue Date: May-2001
Publisher: School of Management, University of Bath
Type: Journal Article
Refereed: peer-reviewed
Rights: Published version (c)School of Management, University of Bath, available online at http://www.ingentaconnect.com/content/lse/jtep/2001/00000035/00000002/art00002.
Citation: Romilly, P. 2001. Local bus service deregulation in Britain : a re-evaluation. Journal of Transport Economics and Policy. 35(2): pp.161-193. [Online] Available from : http://www.ingentaconnect.com/content/lse/jtep/2001/00000035/00000002/art00002
Abstract: Local bus services in Britain (excluding London) were deregulated in October 1986. Bus vehicle kilometres increased after deregulation, but passenger journeys fell and bus fares increased in real terms. The inability to reverse the long-run decline in passenger journeys and the increase in bus fares is often cited as evidence of the failure of deregulation to promote greater competition in the industry. This evaluation is not clear-cut, however, since government macroeconomic policy caused significant reductions in subsidy to the bus industry concurrent with deregulation. It can be argued that it is the reduction in subsidy, rather than the lack of competition, which caused fares to increase. If this is the case, then the evaluation of deregulation should allow for the effects of subsidy reduction. This paper specifies and tests an econometric model in which the role of subsidy reduction is explicitly incorporated in a price-markup equation. The model can be used to generate forecasts of bus fares and passenger journeys after allowing for subsidy replacement. These forecasts are compared with those for the continuation of the regulated system. A cost-benefit analysis calculates the net present value of the internal and external welfare gains from deregulation per se in Britain excluding London for 1986-97. A similar analysis is conducted for the metropolitan and non-metropolitan areas of Britain.
URI: http://hdl.handle.net/10373/380
ISSN: 0022-5258
Appears in Collections:Dundee Business School Collection

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