COMPETITIVE REGIMES WITHIN THE EUROPEAN BUS INDUSTRY - THEORY AND PRACTICE

There seems to be a general move within Europe and North America towar ds a reduction in economic regulation and a further move towards publi c enterprise privatisation. This paper takes a European-wide analysis of the conditions of competition and contestability within the bus ind ustry. The first part examines the theoretical arguments for regulator y reform and focuses in particular on the dynamics of the likely respo nses from the incumbent operators in anticipating the actual form of d eregulation prior to legislative changes, and in the likely consequent actions to maintain their market position - Pre-entry actions and pos t-entry reactions. Comment is also made on whether contestable bus mar kets are sustainable. The evidence of 10 years experience in Britain w ill be used to argue these propositions. The second part of the paper argues the case that potential competition is not enough and that cert ain actions need to be taken to ensure the market remains contestable. The experience of Britain is compared to the competitive regimes in o ther European Countries.