Bus Transport Essay -- Economics

Bus Transport A) The nature of the competition in the bus transport market is very specific. The article suggests competition is used to keep out new entrants to the market thus maintaining market share for the larger firms, "active competition takes place between small operators or between a large and a small operator." Further evidence suggests the competition was not of substantial benefit to the consumer and only used to get one over on the firms rivals, "more services run on routes which where already reasonably well serviced." However some methods of competition showed reasonable benefits to consumers, "charged lower fares than the incumbent." Yet in the long run predatory pricing is not a good thing, as it will eventually push out competition, creating a monopoly where the price will soon go back up again. Non-price competition is lacking in the market, " difficult for suppliers to differentiate their products." As long as the price is reasonable consumers will act on which service requires them to wait for the shortest amount of time, i.e. the first bus to arrive or the most reliable service, "not prepared to wait for a later bus which maybe more comfortable." Cumulatively this type of competition in a market has negative effects, "can lead to congestion, pollution, and instability of services." Large companies that actively compete are likely to loose out in the long run due to the nature of the Kinhed demand curve theory suffering, as...