Competition over service frequency, entry and predation in a fare stage bus industry

In this paper it is shown that predation and entry deterrence on high frequency fare stage bus routes by large operators is extremely difficult and in most cases it is optimal for large firms to tolerate the existence of smaller flexible rivals who 'free-ride' on the extensive timetables and networks provided by the former. The implication is that we should expect the coexistence of small and large operators within the same region as the likely form of long-run competitive equilibrium on unregulated fare stage bus routes.