STATUTORY INCOME AND FIRMS CONCENTRATION IN THE URBAN BUS SERVICES. THE CASE OF BUENOS AIRES.

ANDREA GUTIÉRREZ

Oxford

Otro; FURS Essay Competition 2001; 2001

Foundation for Urban and Regional Studies - International Journal of Urban Regional Research

The urban bus services were historically regulated, as they were always conceived as a public service. The economic question of public service supply was not a cause for concern up to the eighties. Since then, the economic crisis of national states gave priority to public resources. As a result of the strengthening of neo-liberal ideas, the main argument explaining the crisis was based on the excessive state intervention in the economy. Thus, a state reform and economic restructuring stage involving public services was started. Such measures placed the question of the economic regulation of public services in a privileged position for its analysis by technicians and academicians. The purpose of this paper is to contribute a theoretical reflection about the regulation of the urban bus services. Within the regulatory reform of urban bus services at international level, the development of firms concentration processes was an outstanding phenomenon in the evolution of the sector in the last years. In spite of its recent advent, the academic production on the subject from the neoclassical economy standpoint is important both in quantity and in quality, but up to now no theoretical body to explain this "imperfection" of the urban bus industry operation could be formulated. We start from a presentation of the main theoretical approaches supporting the academic debate about the regulation, trying to analyze its conceptual definition in depth and to define the approach of the analysis. Then, through the use of political economy concepts, such as surplus profit and income, we examine the relationship between regulation and generation of accumulation differentials obtained by the operating companies (that is, firm concentration). We start, therefore, from considering an increase in income and not a decrease in costs (the starting point assumed from the neoclassical economy standpoint for the definition of economies -scope economies, network economies, scale economies, etc.-) as support of a differential accumulation process. The empirical research refers to the case of Buenos Aires metropolitan bus services and shows the behavior of the economic equation defined by the regulation on the basis of data from actual companies in the system. The conclusion is that in strictly regulated urban bus markets there may exist accumulation differentials originated in unproductive benefits directly generated by the regulation. Since these surplus profits obtained by the companies may be established as income, we propose their conceptualization as statutory income. To deepen the reflection on regulatory designs of metropolitan public transport is a fundamental requirement for the formulation of urban policies in agreement with the changes occurred in the internal structure and in the mobility of big cities throughout the world during the last decades, especially in Latin America, where the scarcity of public resources, the insufficient infrastructure, and the precarious socio-economic condition borne by most citizens, render the consideration of this subject even more relevant.