Bus Deregulation: A Welfare Balance Sheet

Abstract

A substantial reduction in operating cost per bus-kilometre through improved productivity is shown. However, substantial losses to users through higher fares and service instability emerge. Large increases in bus-kilometres operated did not produce any aggregate increase in ridership, but offset much of the reduction in unit cost. Overall, a small net benefit is shown in the metropolitan areas, but a net loss elsewhere. In contrast, London (subject to a competitive tendering system) shows no user or worker losses, and a substantial net benefit through higher productivity.