In January 1993, coach services were partially deregulated. On behalf of the Swedish Transport and Communications Department, the Swedish Institute for Transport and Communications Analysis is currently analysing the consequences of deregulation after 1993 and of hypothetical case studies with changes in supply and prices of coach and rail services. The general aim of the study is to find criteria whereby either competition or coordination may be advantageous from a welfare point of view. In this study, consequences of historical as well as hypothetical are simulated using a model, and expressed in terms of user benefits and producers surplus for each mode external effects, state finances, excess burden and total social welfare. For this purpose, a stated preference study was carried out in order to obtain train and coach passenger time valuations of both the chosen and the alternative mode. The results indicate a) that the new bus services which have emerged since 1993 have improved the passengers' generalised cost, especially for those with low values of time, b) that the Swedish State Railway's (SJ) response to competition by a fare decrease of 30% has increased the user benefits and at the same time SJ has recovered most of the financial losses it experienced due to coach competition, and c) that the total replacement of rail services by coach services would incur welfare losses.
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