Should I Go by Bus? The Liberalization of the Long-Distance Bus Industry in France

Thierry Blayac, Université Montpellier and Patrice Bougette, Université Côte d'Azur, CNRS, GREDEG ask Should I Go by Bus? The Liberalization of the Long-Distance Bus Industry in France.

ABSTRACT: The opening up of the French long-distance bus industry is one of the outcomes of the Loi Macron. In this study, we build a unique data set of several representative bus routes and show that the effects of the liberalization have been encouraging in terms of fares, new entry, higher frequency, and higher quality. First, with regard to international routes that used to be under cabotage, we find that relaxing quantitative restrictions has led to the expected results on the Lyon-Torino and Paris-London routes. Second, with regard to domestic routes newly created from the Loi Macron, mostly all procompetitive expected variations in the variables have been observed, except for fares. Indeed, we show that bus operators used an initial aggressive pricing strategy to induce demand for the new services and then increased fares once customers became accustomed with the service.