Estimating the price sensitivity of long distance coach passengers in Scotland

1. This paper describes a method used to estimate own price demand elasticities for different types of passenger on the long distance coach network in Scotland. It was deployed in 2006 during an inquiry by the Competition Commission into the effect of a joint venture between two transport businesses, Stagecoach Group and Braddell plc. 2. The existing sources of evidence available to the inquiry included (somewhat dated) information about the price sensitivity of coach passengers in general, but little relating specifically to Scotland. Steps were therefore taken to design, test and implement a passenger survey, in partnership with market research agency Synovate. The survey results indicate lower absolute passenger own price elasticities than those reported in previous academic reviews, and this paper suggests some possible interpretations of this. 3. The results contributed to the Competition Commission's finding that other modes of transport did not constrain coach fares sufficiently to avoid a lessening of competition on some routes as a result of the joint venture. The paper concludes with some brief comments on the limitations of the survey methodology and the importance of local market features in determining own price demand elasticities for transport services