Deregulation and competition in Japanese intercity coach industry

Seiichiro Mizuta

Transportation Research Part A: Policy and Practice, 2020, vol. 139, issue C, 17-34

Abstract: In this paper, we investigate the economic effects of deregulation in Japan’s intercity coach industry. Specifically, we examine the intensity of competition in the industry using a unique dataset, to evaluate the economic effects of two major deregulations in 2002 and 2013. The absence of organized data means there is no previous research that quantitatively evaluates the deregulations. We collect data capturing the entry of bus operating companies by web-scraping and use a structural estimation method developed in econometrics for the purpose of measuring the degree of competition. Our empirical analysis yields the following three main results. First, we find that the markup ratios always exceed 1, which indicates that the entry of one additional firm always intensifies competition. Specifically, the markup gained by one firm under duopoly is estimated to be about three quarters of that under monopoly. Second, the competitive effect of an additional entry decreases as the number of incumbents increases. This result is obtained irrespective of the mode of competition. Third, we find that the services offered by firms in the industry are significantly differentiated. Counterfactual analysis reveals that additional 0.76 firms can enter a market on average by differentiating their products from each other. These results provide useful insights into the development of competition policy pertaining to the contemporary transportation industry.

Keywords: Competition; Markup; Deregulation; Intercity coach (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0965856420306364
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transa:v:139:y:2020:i:c:p:17-34

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tra.2020.06.017

Access Statistics for this article

Transportation Research Part A: Policy and Practice is currently edited by John (J.M.) Rose

More articles in Transportation Research Part A: Policy and Practice from Elsevier
Bibliographic data for series maintained by Catherine Liu ().