The effects of entry deregulation: evidence from passenger transport

Abstract

We study the effects of entry deregulation in the Finnish interurban bus market. We find that the number of operators increased on routes connecting large and mid-sized cities. Increased competition resulted in 29% lower prices in the interurban bus market. Consistent with our evidence on entry, we find that prices decreased on routes connecting large and mid-sized cities, while on routes connecting smaller cities, we find no significant change in prices. We also study how the reform affected the long-distance railway market and find that increased intermodal competition resulted in a 22% price decrease. Overall, we find that the entry deregulation benefited consumers.