The Impact Analysis of Bus Industry Deregulation by Estimating a Cost Function

Abstract

The Road Transport Law was partly amended in 2002. Then, regulations to adjust supply and demand of bus service were repealed, and subsidization for local bus was modified. This amendment of the low aimed activation of bus service. This paper aims to analyze a change in the production structure of bus industry by this deregulation. First, a Trans-Log Cost Function is estimated with consideration to a period of the effect and the competitive pressures. Second, the relation between a regional difference and competitive pressures is verified by using this Cost Function. Then, effect of competitive pressure on productive structure is analyzed. Consequently, it is found that the production structure of bus industry is different between the regions and the competitive pressures lead inefficiency of cost structure in bus industry.