The impact of regulatory aspects on economies and diseconomies of scale in bus industry

Public transport industry, largely based on bus systems, is often claimed to be dominated by economies of scale. However, some empirical evidences show that larger firms are characterised by production costs considerably higher than smaller ones. The paper aims at discussing the topic of economies/diseconomies of scale in bus industry from a regulatory point of view. We conclude that the presence of economies or diseconomies of scale is the result of the balance between industrial and regulatory aspects.