The ministry of transport
maintains agreements with two cooperatives, Dan and Egged that monopolize
services in their respective regions. The thesis critically assesses this
situation. Economies-to- scale arguments have been raised to justify a monopolistic structure in the
industry. However, absent competition, the costs of these monopolies increase.
Accordingly, competition should be introduced to control costs and reduce
subsidies.
On the other hand, public
transportation helps reduce the number of private cars.
Therefore, a central question is
whether the public transport sector should be privatized, or remain under
public ownership.
An important part of the study is
the examination of actual data and especially of experiments in transport
reforms of other countries such as Britain, Denmark, Sweden, Norway and Greece.
It seems that the reforms were
successful in reducing costs and subsidies, but they also caused environmental
changes, which were caused by the shift of travelers from public to private
transport.
The study introduces a
quantitative model to compare the benefit and damage that resulted from the
privatization policy adopted in Britain during 10 years.
The benefit resulting from
privatization amounts to 1089 million £ and is greater than the damage of 248
million £.
The study attempts to use similar
computation for the Israeli case, and concludes that reform in the transport
sector in Israel is worthwhile.
