Why Competition Does Not Work in Urban Bus Markets: Some New Wheels for Some Old Ideas
AbstractIn this paper a model is presented based on ideas borrowed from the job search and price dispersion literature to characterise the pricing equilibrium of a competitive bus market in a more general setting than previously found in the literature. The results indicate that collusion is not required to obtain a monopoly price structure. Rather collusion can be interpreted as a coordination device among operators to reach their most preferred equilibrium. The results rationalise some of the stylised facts observed in liberalisation experiences around the world, including rising prices, excessive entry, convergence of fares among operators, and other observed behaviour. © 2007 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.
Volume (Year): 41 (2007)
Issue (Month): 2 (May)
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Web page: http://www.bath.ac.uk/e-journals/jtep
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- Bataille, Marc & Steinmetz, Alexander, 2013. "Intermodal competition on some routes in transportation networks: The case of inter urban buses and railways," DICE Discussion Papers 84, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
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