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Contestability in bus markets – evidence from the British de-regulated market

Cowie, Jonathan



Following the 1985 Transport Act in Great Britain, reforms in the provision of bus services continue across Europe and other parts of the world to this day. The British experience, however, remains a key point of study in informing these continuing developments. This article looks at the issue of contestability in bus markets, and tests for the existence of the contestable market in Britain through an examination of fare levels, profit margins and technical efficiencies in 90 identifiable bus markets. The main conclusion is that there is evidence of the contestable market in Britain, however it can hardly be described as widespread, only found to be present in 15 of the 90 markets identified in the sample. The real issue however, particularly with regard to continuing reforms elsewhere in Europe, is the ability of regulatory authorities to maintain competitive and contestable (free) markets and the research suggests that in the face of market forces this is simply not possible. The only conclusion therefore is that contestability in the free market is not sustainable, and thus can only be introduced directly through franchising.


Cowie, J. (2012). Contestability in bus markets – evidence from the British de-regulated market. Applied Economics, 44, 4777-4785.

Journal Article Type Article
Publication Date 2012
Deposit Date Apr 13, 2012
Print ISSN 0003-6846
Publisher Routledge
Peer Reviewed Peer Reviewed
Volume 44
Pages 4777-4785
Keywords bus de-regulation; contestable markets; pricing and profits; efficiency; regulation;
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