Bus Deregulation

Bus deregulation: ten years on by Peter Mackie, John Preston and Chris Nash Transport Review, 15(3), 229-251.

INTRODUCTION In 1984, a White Paper Buses was published proposing bus deregulation. The policy was implemented in the 1985 Transport Act, which provided for the deregulation of local bus services in United Kingdom except for Northern Ireland and Greater London. Both the White Paper and the Transport Act aroused much debate for and against the policy. The case study, Bus deregulation: ten years on, by Peter Mackie, John Preston and Chris Nash (1995), identified the major disagreements in the policy debate and reviewed the results of bus deregulation ten years after the policy was introduced.

METHODS OF THE CASE STUDY Mackie et al. first reviewed the arguments in the debate on bus deregulation Gwilliam et al. (1985) pointed out that the White Paper Buses in essence brought up four propositions: that deregulation would produce a competitive market; that competition would substantially reduce costs; that a competitive market would improve resource allocation; and that a competitive market would not cause significant undesirable spin-off effects. Gwilliam et al. rejected all those propositions and proposed competition for the market (tendering) as a better alternative. On the other hand, Beesley and Glaister (1985) argued for bus deregulation and rejected tendering on grounds of limited competitive variables and danger of regulatory capture of the franchiser by the franchisee.

In light of the opposing arguments, the four propositions of the White Paper were then examined, with particular focus on the outcome of the deregulated environment. The assessment was structured as follows. Firstly, the structure of the bus market was examined in terms of its contestability, the behaviour of new entries as well as the incumbents, the development of new service patterns and the wave of unpredicted mergers.

Secondly, the impact of bus deregulation on market...