Contractual Form and Performance in the Norwegian Bus Industry 1986-96

Abstract

The Norwegian public transport market has experienced a significant development over the last decade. Over this period the number of independent companies have declined from 220 to 83, the two largest groups have through mergers and buy outs achieved control over more than 40% of the market. The regulating regime has changes from net cost contracts based on historical concessions through negotiated contracts based on normalised costs and efficiency agreements to tendered contracts in some counties, so far based on full cost. During the same period the operating unit cost has declined by approx. 20%, the subsidy rate by approx. 1/3 from 37% to 24%, and production has grown slightly. To test hypothesises about factors affecting the cost level at company and county level we have collected accounting and production data for all the companies for the period 1986-96 Statistics Norway. This pooled time series cross section data set is used to estimate the effect of contractual form, economy of scale and scope, subsidy level on cost pr vehicle km, controlling for factors as passenger density, route speed and urban area. The same data and variables are applied to test hypothesises of market efficiency measured by cost pr passenger km.