The Transport Act 1985 allowed on-the-road competition between bus services after some 50 years of protection of established services through road service licensing. The ensuing competition, over the period October 1986 to September 1990, is the subject of this study, for which a data base with records of over 700 cases of competition was compiled. Analysis of the data reveals the pattern of growth ofcompetition over the first four years after deregulation: after an initial surge, the rate of occurrence of new cases has converged with that of cessations, and a state of dynamic equilibrium, with just under 400 active cases, seems to have been established. Most competition has taken the form of small operators encroaching on the "territories" of larger, established operators. Size, and an established position in a local market, appear to be important competitive advantages. Competition tends to last longer when operators are more or less evenly matched in size. Generally, the probability of competition coming to an end declines with time, and it appears that in a finite fraction of cases competition could be sustained indefinitely. (A)
Abstract