Competition in the United Kingdoms Local Bus Market - Essay Example

The structure-conduct-performance model is a comprehensive perspective on industry dynamics. Within the context of the United Kingdom’s local bus industry, they have become launch entrenched in various regions making competition all but non-existent. In terms of conduct elements, there is an issue as the consolidated bus companies are able to leverage prices as a means of preventing the emergence of competitors.

Perhaps most important are the performance aspects of the model guide. In these regards, the United Kingdom bus companies have colluded in dramatically changing their schedules and routes when new competition enters the market. These practices result in considerable barriers to entry for potential competitors and are perhaps the most direct reason a monopoly has occurred in this industry. In addition to these tactics, over bussing and multi-ticket operators are regular occurrences. The cumulative impact of these practices, as previously mentioned, has resulted in limited competition and innovation; in the northeast of England, it was even observed that bus companies were even colluding to avoid competition as a means of protecting their own areas. 2. The comprehensive understanding of these practices demonstrates that increased regulation must occur.

The United Kingdom Competition Commission noted that because of the lack of competition consumers have received poorer services and higher fares. The commission also outlined a number of measures to change these practices. Among these measures includes the banning of over-bussing and short-term measures designed to limit competition. Additionally, the bus companies will have to share bus stations with competitors and accept multi-operator ticketing schemes. The Confederation of Passenger Transport UK (CPT), the representative body for the bus companies, disagrees with the commission’s findings; this organization argues that while some changes could be made, in large part the current system has the best structure.

Additionally, the United Kingdom Competition Commission’s report argued that considerable discretion should be given to proposed future mergers, as these mergers could further reduce industry-wide competition. This monopolistic consolidation has limited competition and led the United Kingdom Competition Commission to report that increased measures must be instituted to improve competitive flows. It appears from the information provided that the commission is justified in its analysis. Ultimately, further analysis needs to be conducted to determine why structural dimensions of the bus industry, independent of collusive practices, have allowed such consolidation to occur in the first place.