THE ECONOMIC BENEFITS FROM COMPETITION IN BUS PUBLIC TRANSPORT - THE ISRAELI CASE

This paper evaluates the impact of competition in public bus transport in Israel six years after its introduction in 2000. The paper presents a detailed analysis of the impact of competition on fares, level of service, and ridership of each of the line clusters that were put out for tender. The contribution of the competition to the national economy in terms of service costs and long-term subsidy savings is estimated, as are changes in consumer surplus. Overall, competition has so far reduced the government subsidy to public transport by NIS 96 million while increasing consumer surplus by an estimated NIS 120 million, together representing 7% of the pre-competition total service costs. Actual saving in real cost per bus-kilometer as a result of the tendering was in the range of 18%-46%. Ridership increased on most competition clusters by a range of 7%-58%.