2. Ian Savage (1993). Deregulation and privatization of Britain's local bus industry. Journal of Regulatory Economics 5(2):143-158.
[Journal Website]  [Manuscript Version]

In 1986 the British government deregulated the majority of the local bus industry, cut the amount of subsidy, and privatized many public bus companies. Unit costs have declined significantly, cross-subsidies have been reduced, and there has been innovation in operating practices. However, mergers have increased concentration, and demand has declined due to the turmoil of service changes and the loss of network integration. In London an alternative policy has been adopted whereby there is Demsetz competition for short-term monopoly rights. The paper argues that this regime will lead to greater benefits in the long run.

3. Ian Savage (1985). The Deregulation of Bus Services. Aldershot: Gower.

This book represents my Ph.D. thesis at the Institute for Transport Studies at the University of Leeds. It was written prior to the 1985 Transport Act that deregulated and privatized much of the British bus industry.

At the time the book was written the bus industry had been organized as a system of strictly regulated route monopolies for over fifty years. Suggestions that this monopoly had led to inefficiencies and the stifling of innovation prompted a critical appraisal of how a competitive structure might be generated. The book attempts to determine the economically optimal market structure for the local omnibus industry in the United Kingdom. both by the development of appropriate models of bus markets, and by empirical observations of how bus markets work.

The book concludes that competition between bus companies "on the road" is liable, in the short run, to lead to a social welfare disbenefit to society. In addition at the then present levels of service, and the then subsidy regimes, incentives to enter the market were absent in a large proportion of the local bus network. Competition that might emerge, on the profitable routes and timings, will reduce internal cross-subsidy and affect users of unremunerative services. However, the research concludes that this reduction can lead to social welfare improvement if the there is a curtailment of activities on which costs outweigh consumer benefits, or where direct subsidy is substituted for cross-subsidy.

There are, however, potential gains from competitive stimuli in the form of lower cost operation, either by the removal of previous inefficiencies or by the replacement of high cost operators by lower cost ones. The institutional problem is how to obtain the long run benefits without the short run costs of unfettered competition "on the road."

The book recommends that in the bus industry competition for the market rather than competition in it is required. The book concludes that for effective potential competition in the bus industry, a regulated system with low entry barriers such as franchising or contracting of services should result.

Sections of the thesis research also appeared in a series of published papers:

An overall summary is in:
3a. Ian Savage (1986). Evaluation of competition in the British local bus industry. Transportation Research Record 1064:1-10.
[Published Version]

A model of competition is in:
3b. Ian Savage (1984). A note on 'unnecessary and wasteful' competition in bus transport. Journal of Transport Economics and Policy 18(3):303-309.
[Published Version]  [Journal Website]  [JSTOR]

Details on competitive entry under the more-restrictive legislation applicable between 1980 and 1986 is in:
3c. Ian Savage (1985). Characteristics of local bus competition since 1980. Transport Economist (Journal of the UK Transport Economists' Group) 13(1):1-8.
[Published Version]

An analysis of rural bus withdrawal due to a reduction in cross-subsidy is in:
3d. Ian Savage (1985). Measuring the economic effects of rural public transport withdrawal: the case of Buttermere-Loweswater. Proceedings, Twelfth Rural Public Transport Seminar, November 1985. London: Polytechnic of Central London, pp 26-49.
[Published Version]

An analysis of possible safety implications is in:
3e. Ian Savage (1984). Safety in the deregulated bus industry. Traffic Engineering and Control 25(11):564-565.
[Published Version]