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Evaluating the long term impacts of transport policy: An initial assessment of bus deregulation


  • Preston, John
  • Almutairi, Talal


Local buses in Britain, outside London, were ‘deregulated’ as a result of the 1985 Transport Act, with most of the organisational changes implemented in 1986 but many of the ownership changes occurring over a longer period. By contrast, in London, the 1984 London Regional Transport Act introduced a system of comprehensive tendering – but it took 10 years for the organisational and ownership changes to be fully implemented. This paper examines the long term impacts of these changes. A key issue when examining long term changes is that of the counterfactual – what would have happened if the changes had not occurred? An econometric model of the demand for local bus services in Britain is outlined and used in conjunction with extrapolative methods for key variables such as fares and bus kms to determine demand-side counterfactuals. Some analyses of subsidy and of costs will also be outlined. This will then permit the examination of welfare change by estimating changes in consumer and producer surpluses, updating earlier studies. It is found that outside London, bus demand declined strongly, at least up to the year 2000 and some of this reduction can be ascribed to deregulation. By contrast in London, demand has generally been increasing. However, in both areas operating costs also declined strongly, again up to 2000, but since then there have been strong increases in costs and subsidy. Our initial finding is that there are net welfare increases both outside and inside London, but with welfare increases per capita being five times greater in London than elsewhere. However, sensitivity analysis shows that our results are sensitive to the specification of the modelling system and assumptions made concerning the counterfactual, particularly for the results for London.

Suggested Citation

  • Preston, John & Almutairi, Talal, 2013. "Evaluating the long term impacts of transport policy: An initial assessment of bus deregulation," Research in Transportation Economics, Elsevier, vol. 39(1), pages 208-214.
  • Handle: RePEc:eee:retrec:v:39:y:2013:i:1:p:208-214
    DOI: 10.1016/j.retrec.2012.06.015

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    References listed on IDEAS

    1. Stephen Glaister, 1991. "U.K. bus deregulation: the reasons and the experience," Investigaciones Economicas, Fundación SEPI, vol. 15(2), pages 285-308, May.
    2. Evans, A., 1990. "Competition And The Structure Of Local Bus Market," Papers 90-17, Flinders of South Australia - Discipline of Economics.
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    5. Peter Romilly, 2001. "Subsidy and Local Bus Service Deregulation in Britain: A Re-evaluation," Journal of Transport Economics and Policy, University of Bath, vol. 35(2), pages 161-193, May.
    6. Joyce M. Dargay & Mark Hanly, 2002. "The Demand for Local Bus Services in England," Journal of Transport Economics and Policy, University of Bath, vol. 36(1), pages 73-91, January.
    7. Kennedy, David, 1995. "London bus tendering: a welfare balance," Transport Policy, Elsevier, vol. 2(4), pages 243-249, October.
    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Cited by:

    1. van de Velde, Didier & Augustin, Katrin, 2014. "Workshop 4 Report: Governance, ownership and competition in deregulated public transport markets," Research in Transportation Economics, Elsevier, vol. 48(C), pages 237-244.
    2. Fiorio, Carlo V. & Florio, Massimo & Perucca, Giovanni, 2013. "User satisfaction and the organization of local public transport: Evidence from European cities," Transport Policy, Elsevier, vol. 29(C), pages 209-218.
    3. Carlo Vittorio FIORIO & Massimo FLORIO & Giovanni PERUCCA, 2011. "Consumers’ satisfaction and regulation of local public transport: evidence from European cities," Departmental Working Papers 2011-26, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Vigren, Andreas, 2016. "Competition in Swedish passenger railway : entry in an open-access market," Working papers in Transport Economics 2016:18, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    5. repec:cog:socinc:v:5:y:2017:i:4:p:147-160 is not listed on IDEAS
    6. repec:eee:juipol:v:50:y:2018:i:c:p:133-143 is not listed on IDEAS
    7. Ida, Yoram & Talit, Gal, 2015. "Regulation of public bus services: The Israeli experience," Transport Policy, Elsevier, vol. 42(C), pages 156-165.
    8. Bouf, Dominique & Faivre d’Arcier, Bruno, 2015. "The looming crisis in French public transit," Transport Policy, Elsevier, vol. 42(C), pages 34-41.
    9. Tomeš, Zdeněk & Kvizda, Martin & Nigrin, Tomáš & Seidenglanz, Daniel, 2014. "Competition in the railway passenger market in the Czech Republic," Research in Transportation Economics, Elsevier, vol. 48(C), pages 270-276.
    10. Preston, John, 2016. "Deja Vu all over again? Rail franchising in Britain," Research in Transportation Economics, Elsevier, vol. 59(C), pages 107-115.
    11. Mouwen, Arnoud & van Ommeren, Jos, 2016. "The effect of contract renewal and competitive tendering on public transport costs, subsidies and ridership," Transportation Research Part A: Policy and Practice, Elsevier, vol. 87(C), pages 78-89.
    12. Epstein, Bryan & Givoni, Moshe, 2016. "Analyzing the gap between the QOS demanded by PT users and QOS supplied by service operators," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 622-637.
    13. van de Velde, Didier, 2014. "Market initiative regimes in public transport in Europe: Recent developments," Research in Transportation Economics, Elsevier, vol. 48(C), pages 33-40.
    14. repec:eee:trapol:v:65:y:2018:i:c:p:114-125 is not listed on IDEAS
    15. Cowie, Jonathan, 2014. "Performance, profit and consumer sovereignty in the English deregulated bus market," Research in Transportation Economics, Elsevier, vol. 48(C), pages 255-262.
    16. Preston, John & Almutairi, Talal, 2014. "Evaluating the long term impacts of transport policy: The case of bus deregulation revisited," Research in Transportation Economics, Elsevier, vol. 48(C), pages 263-269.
    17. repec:eee:trapol:v:58:y:2017:i:c:p:1-9 is not listed on IDEAS
    18. Preston, John, 2016. "Big buses in a small country: The prospects for bus services in Wales," Research in Transportation Economics, Elsevier, vol. 59(C), pages 379-387.
    19. repec:eee:trapol:v:59:y:2017:i:c:p:93-105 is not listed on IDEAS

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    Local bus; Deregulation; Welfare analysis;


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