PRIVATELY-PROVIDED URBAN TRANSPORT SERVICES. ENTRY DETERRENCE AND WELFARE

Although there are comparatively few examples of privately-provided urban transit services, research suggests that such services are generally possible. The article estimates a simulation model to test the hypothesis that existing public utility's transit services serve to deter private-carrier entry. If such entry does occur the article questions the certainty that a welfare gain results. The author outlines a welfare criterion, independent of the distribution of consumers surplus gain, which allows the conclusion that such a gain is very often likely to be the result. (TRRL)