Bus transport: Is there a regulatory cycle?

In 1983 Douglas Needham’s “The Economics and Politics of Regulation” propounded the dynamic nature of the regulatory phenomenon in a world of uncertainty, change and multiple, often conflicting, economic interests. The book’s publication coincided with the early years of transport deregulation in the United States, but predated recognition in the transport sector of the significant distinction between competition “in the market” and “for the market”. It did not therefore consider whether fluctuations between the domination of administration and that of free market forms, and between public and private sector responsibility for production of major utilities, were inherently perennial or whether there was a potential stable long term combination of public role as procurer and private sector role as supplier of these public utility services. This paper addresses that question in the context of two decades of experience of regulatory reform in the field of bus transport in developing and transitional economies as well as in industrialized countries. It analyzes a number of drivers of the cycle, including the adaptive, self-seeking behavior of suppliers and unrealistic aspirations of politicians, which ensure that stability will be hard to achieve, and concludes by setting out the structural and institutional requirements for a more robust and stable regulatory outcome.