Regulation of public bus services: The Israeli experience

Abstract

The present research discusses structural reforms in the regulation of public bus services in Israel. In 2000, the market underwent a significant change; as a result, some of the bus services on fixed routes that were previously provided by two monopolistic operators are currently provided by means of competitive tendering. The research examined the reasons for this change, the measures taken in order to implement it, and the outcomes from the perspective of time. The findings indicated that, as in other countries, competitive tenders in Israel have succeeded in reducing costs, compared with the past, and this has led to a reduction in the related subsidies required of the government. At the same time, there was a general rise in the level of service provided to the public and a decline in fares. It seems that the government succeeded in improving its degree of control over the provision of bus services, but frequent changes in the structure of the tenders and their characteristics might reflect difficulties in the implementation of competition in the bus services in Israel.