Public funding to long distance buses: an entry barrier or a necessity?

Despite the deregulation of the market, the Norwegian express bus market is heavilyconcentrated to one major actor; Nor-Way Bussekspress which is owned by 40 different busoperators. We investigate this lack of competiton. Although several entry barriers can beidentified from a theoretical point of view, we find most of them to have negligible effects inthe real world.One important entry barrier that we find is the fact that the main company, Nor-WayBussekspress, receives public subsidies for certain local parts of their express routes, paid bylocal county councils. This not only guarantees a certain minimum of revenue, but is also anefficient barrier for potential operators to enter the market.However, this kind of arrangement has several positive effects. It makes a more extensiveservice possible, and diminishes the need for additional local public transport. Whether thesebenefits offset the welfare loss of reduced competition is an open question.