The effects of local bus deregulation in the United Kingdom are assessed over the period 1985/86 to 1988/89. After taking account of lower earnings and fuel costs, a substantial reduction in operating cost per bus-kilometre through improved productivity is shown. However, ridership losses were greater than expected, and substantial losses to users through higher fares and service instability emerge. Large increases in bus-kilometres operated did not produce any aggregate increase in ridership, but offset much of the reduction in unit cost. Overall, a small net benefit is shown in the metropolitan areas, but a net loss elsewhere. In contrast, London (not deregulated, but subject to a competitive tendering system) shows no user or worker losses, and a substantial net benefit through higher productivity.
Abstract