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The limits to competition in urban bus services in developing countries

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  • Antonio Estache
  • Andrés Gómez-Lobo

Abstract

This paper makes the case for the return of regulation in the organization of urban bus services in developing countries. During the past three decades urban public transport policy has transversed several phases. From public ownership and monopoly provision, the eighties and nineties was characterized by liberalization of the sector. The experience of several countries, in particular Chile, indicates that liberalizing the sector may not be the welfare maximizing option. This paper discusses the market failures that justify this claim and presents the regulatory options available in this emerging new role of government. Throughout the paper we illustrate ideas with examples from Chile, Colombia and a few other countries.

Suggested Citation

  • Antonio Estache & Andrés Gómez-Lobo, 2003. "The limits to competition in urban bus services in developing countries," Working Papers wp205, University of Chile, Department of Economics.
  • Handle: RePEc:udc:wpaper:wp205
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    File URL: http://www.econ.uchile.cl/uploads/publicacion/4123be85-5e73-437f-a0c4-fdffe6b50cd8.pdf
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    References listed on IDEAS

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    1. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
    2. Philippe Gagnepain & Marc Ivaldi, 2002. "Incentive Regulatory Policies: The Case of Public Transit Systems in France," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 605-629, Winter.
    3. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
    4. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    5. Laffont, Jean-Jacques & Tirole, Jean, 1987. "Auctioning Incentive Contracts," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 921-937, October.
    6. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    7. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    8. B. De Borger & K. Kerstens, 2006. "The performance of bus-transit operators," Post-Print hal-00185456, HAL.
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    Citations

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    Cited by:

    1. Zhi-Chun Li & William Lam & S. Wong, 2012. "Optimization of Number of Operators and Allocation of New Lines in an Oligopolistic Transit Market," Networks and Spatial Economics, Springer, vol. 12(1), pages 1-20, March.
    2. Daniel Albalate & Germà Bel & Joan Calzada, 2010. "Urban transport governance reform in Barcelona," IREA Working Papers 201009, University of Barcelona, Research Institute of Applied Economics, revised Jun 2010.
    3. Kenneth A. Small, 2007. "Urban Transportation Policy: A Guide and Road Map," Working Papers 060724, University of California-Irvine, Department of Economics.
    4. Hensher, David A., 2007. "Sustainable public transport systems: Moving towards a value for money and network-based approach and away from blind commitment," Transport Policy, Elsevier, vol. 14(1), pages 98-102, January.
    5. Luc Baumstark & Claude Ménard & William Roy & Anne Yvrande-Billon, 2005. "Modes de gestion et efficience des opérateurs dans le secteur des transports urbains de personnes," Post-Print halshs-00103116, HAL.

    More about this item

    Keywords

    transport; efficiency; regulation;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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