Factors affecting European privatization and deregulation in local public transport: The evidence from Scandinavia

This paper concerns itself with the question of the forces behind privatization and regulatory reform in local public transport in Europe. Two different approaches to the explanation of the changes are presented: the political and the economic. The paper gives a review of current discussions and sets forward the hypothesis that even though there is much evidence to support a process of privatization and deregulation (with a vague rationale), much can be seen as a political process; the real objectives of change can be found in policies advocating the need for reduced public expenditure and subsidies. Thus, the ideological side of change is weaker than the financial arguments. The paper discusses the process in Europe on the basis of an all-European survey, and concludes that there is no general trend towards deregulation in local public transport in Europe, but a trend towards the use of franchising in certain countries such as Norway, Sweden, and Denmark. The Scandinavian experience is dealt with and the results of change of policies are analyzed. The wider implications of regulatory reform in Europe are seen in the context of the development of the single European market, and the need for transport policies to account for environmental problems. All these factors indicate that there will be some change, but more cautious ones, and this again indicates that a franchising solution may be more likely than full deregulation in the European bus industry.