by Elizabeth Pinkston on January 7, 1980
by Elizabeth Pinkston, Thomas D. Hopkins, R. Robert Russell and Rob Sedgwick

The Council on Wage and Price Stability today urged the Interstate Commerce Commission to begin proceedings aimed at reducing barriers to entry into the intercity bus industry. The Council said the lowering of regulatory barriers to entry could increase competition and, particularly if accompanied by reform of rate and fare regulation, could provide substantial anti-inflationary benefits to consumers.  Since competition generally leads to the most efficient allocation of resources, regulation should be employed only where the free market fails, the Council said. The intercity bus industry is not characterized by the type of market failure problems that warrant government intervention, the Council added.  The Council suggested that the existing high degree of concentration in the intercity bus industry — Greyhound Lines and Trailways currently control more than 60 percent of industry revenues — is a direct result of overly-restrictive entry controls by the ICC.  The Council also noted that the ICC’s temporary easing of entry rules last summer, as a measure to cope with the fuel shortage, resulted in increased service to consumers.  These included additional service to small towns, service aimed at meeting special needs of Spanish-speaking passengers, and
special service for resort-bound passengers.  The Council added that the limited duration of these temporary
authorities precluded carriers from making major changes in their operations. More dramatic benefits could result from a permanent easing of regulatory barriers, the Council said.  The Council’s comments were filed with the ICC in support of a petition by the Transportation Consumer Action Project (TCAP) for the ICC to institute a rulemaking proceeding to consider relaxing entry barriers in the intercity bus industry.  TCAP is a nonprofit consumer organization formed recently to study consumer interests in federal regulation of surface transportation, to educate consumers about the impact of these policies, and to represent consumer interests before regulatory agencies.  A copy of the Council’s submission is attached.

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