Regional bus operator VeloBus was ordered to divest several key routes after the Competition and Markets Authority (CMA) concluded that its acquisition of the rival SwiftTransit network would lead to higher fares and reduced timetables for passengers in Exeter, Taunton, and Yeovil. While VeloBus operates primarily express inter-urban services linking major employment hubs, SwiftTransit’s services consist of smaller, localized routes connecting suburban estates to town centres.
The CMA has concluded that the acquisition could lead to a substantial lessening of competition in the local bus transport market in Exeter, Taunton, and Yeovil, where VeloBus and SwiftTransit are the primary service providers.
Discuss the likely impact of "a substantial lessening of competition in the local bus transport market in Exeter, Taunton, and Yeovil" (Extract C, lines 5–6).
92 exam-style questions on Edexcel A A Level Economics 3.4 Market structures, covering 3.4.1 Efficiency, 3.4.2 Perfect competition, 3.4.3 Monopolistic competition, 3.4.4 Oligopoly, 3.4.5 Monopoly, 3.4.6 Monopsony, and 3.4.7 Contestability. Each one has a worked solution and a mark scheme showing where the marks go.