The Swedish local and regional bus services were deregulated in 1989.
Since then, 70% of the traffic has been subject to competitive tenderi
ng. This paper shows that tendering has had a significant direct effec
t on costs, but no indirect effects on costs in regions without compet
itive tendering could be detected. Although demand has fallen in recen
t years, this analysis indicates that such a trend is not related to i
ncreased competition.