Anti-Competitive Practices in Public Transportation in Nepal

Despite the presence of Competition Promotion and Market Protection Act, 2007 ruling out all anti-competitive behaviors as illegal, and the Supreme Court specifically declaring the syndicate-run public transport system illegal in 2008, the stronghold of cartel-run transportation service in Nepal makes the weak enforcement of rule of law in the country apparent. Thus, it is no surprise that public utility vehicles account only for around 3% of the total registered vehicles in Nepal (Thapa, 2013). The impact of the resulting undersupply has meant poor services at higher costs for the consumers. According to a survey by World Bank, 75% of passengers taking public transportation are concerned with overcrowding, 26% are concerned with personal insecurity (33% women, 16% men), 17% are concerned about reckless driving and fear of accidents (The World Bank, 2013).

Our attempt in this paper, a latest offering in the series to improve the quality of public transportation in Nepal through market-based reforms.

Based on the analysis, we propose two important workable recommendations, which are, allowing transport entrepreneurs the freedom to choose their own route and reforming the composition and role of Transport Management Committee by balancing through an equally strong representation from consumers of the transportation services. We also recommend not involving the existing transport operators in deciding route permits, if not getting rid of a centralized route permit system overall. Active involvement of syndicate members in the committee in route permit and rule designation is the locus which gives the syndicate the ability to restrict potential competitors legally.

You can download the paper here-

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