Financial and structural impacts of quasi-marketization of the Helsinki Metropolitan Area's bus services

This study describes the phases of quasi-marketization of the Helsinki Metropolitan Area's bus services and analyzes the financial and structural consequences for purchasers and providers. Qualitative data was collected through interviews, a focus group, and extensive document reviews, while the quantitative data was received from a sub-regional authority and from the Finnish Patent and Registration Office's database. According to our findings, even if the clear purchaser-provider split was a difficult and long process, the threat of competition and particularly the introduction of tendering resulted in reductions in contract prices. Bus operators started to compete for market shares and over the years of the quasi-market they lost their profitability and consumed their own assets. The quasi-market format could not provide equal terms of competition between municipal and private operators, resulting in all municipal and many small operators disappearing from the market. The market structure became more concentrated as the number of purchasers and providers fell. The quasi-market framework was initiated by the central government and it has been instrumental for local political decision-makers to increase the responsiveness of operators through competitive contracting.