There is a common and rarely questioned assumption that transport is ‘special’, cannot be safely left to the market, and requires close governmental control of its structure and management. This conventional wisdom has historical roots in the extra-ordinary emotions aroused by the early railways and the popular belief in the inter-war years that railways should be protected from upstart road operators.

From these beginnings, administrative regulation of public transport has become all-pervasive, imposing territorial carve-ups, cross-subsidisation, quantity licensing, and price controls. Its proliferation has been justified by a variety of defective arguments about economies of scale in the industry, the supposed instability of competition, the requirements of urban land-use planning, the ‘coordination’ problem, and the ‘right’ of every citizen to mobility.

The stifling of market mechanisms has led to misallocations of resources and such large and consistent losses as to create a widespread myth that public transport can never be run profitably. Reform is urgently needed to permit the market much wider scope.

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