Around the world, a variety of methods have been employed for providing urban bus services ranging from public monopolies at one extreme to unregulated private firms at the other extreme; the intermediate alternatives usually involve private firms with some degree of public regulation over fares and entry. Public monopoly is common in the developed world while private provision with some form of regulation is the norm among developing countries. The British reforms of 1986 pioneered two schemes for bus provision. First, outside of the London metropolitan area the government created one of the few largely unregulated private regimes in the world (the most notable other recent examples being in Sri Lanka and Chile); second, within London it allowed local public authorities to retain control of the design of the route network and fares but forced them to tender all services to private firms (a scale of tendering heretofore unknown). The most obvious conclusion from the experience of Britain and elsewhere is that it is important to introduce at least enough competition to keep costs under control. Both inside and outside of London the costs of providing a bus mile of service were dramatically reduced from those under the old public monopoly regime. The outstanding issue is whether competition in the design of fares and services should also be introduced or whether these should be left to public authorities (as in London). The experiences of Chile and Sri Lanka as well as Britain are inconclusive as to whether market driven or publicly designed and co-ordinated services are superior, and the choice probably should depend on the particular context. (A)
Abstract