ABSTRACT
Throughout the world, the traditional operation of public transport markets (defined here as bus and rail) evolved to become based on public ownership and control (Gomez-Ibanez and Meyer, 1993) as a result of concerns regarding various forms of market failure and concerns that public transport was a quasi-public good, or more strictly a merit good, which provides the public with a basic level of mobility (Gwilliam, 1987). For example, in the UK, the bus industry grew rapidly and somewhat chaotically in the 1920s, leading to concerns about public safety and the ‘curious old practices’ that emerged from what was seen by some to be wasteful competition (Foster and Golay, 1986). As a result, the Road Traffic Act of 1930 regulated the bus industry in terms of quantity (operators required road service licenses), fares and safety in a system controlled by government-appointed traffic commissioners.
