Quality Competition in Bus Services. Some Welfare Implications of Bus Deregulation

Quality Competition in Bus Services. Some Welfare Implications of Bus Deregulation

The authors find that a competitive equilibrium will have only two firms, providing that services of different quality are at different fares. They consider factors influencing consumers' welfare under competition and where there is a public monopolist. Where there is already competition between buses and taxis, there may be no scope for minibuses as a third competitor.

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Deregulating Taxi Services: A Word of Caution

This paper studies pricing and capacity decisions in markets for phone-ordered taxicabs. Firms first choose capacities and then compete in prices. As firm demand increases, so does waiting time. This dampens competition and makes prices too high from the social point of view. Efficiency improves if firms choose large capacities. In a two-firm setting, equilibrium capacities are shown to be larger if both firms maximise total profits than if they maximise profits per cab.

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