Unregulated Entry with Quality Control / Legal Aspects / Legal and Regulatory Framework

Legal and Regulatory Framework
Unregulated entry and quality control require both an open market and, what is clearly a negation of a completely open market, proscriptive action by the government.

Creation of an open market for bus operators
This kind of open market, one that allows free entry to all bus operators who wish to provide their services to the public, exists because:

There is a legal vacuum with respect to the issue of entry into the urban bus transport sector. Since nothing authorizes or prevents the entry of new bus operators in the market, it’s a clear example of a system, such as it is, that operates on the principle of what is not forbidden is allowed.
A municipal government or a municipal transport authority has been granted the power to exercise a monopoly over urban bus transport services and the monopoly is not exercised or is exercised only on limited routes or areas.
A law specifically provides for the free entry to the urban bus market, either generally or with respect to some designated routes or areas. The enactment of such a law makes sense only where entry to the urban bus transport market was not already free. More common than such a law by positive right (“the market shall henceforth be free”) is the creation of the same open market environment by way of a law which repeals existing legal restrictions. Both scenarios are, however, cases of deregulation at work.

Proscriptive action by the government
Unregulated entry with quality control requires from the government, at a minimum, the enactment of a general prohibition to the effect that no person shall operate urban bus transport services unless he complies with prescribed terms and conditions. This differs from unregulated entry without quality control, which can be accommodated even when there is a legal vacuum concerning all aspects related to the urban bus transport sector.

In addition to imposing penalties for anyone who contravenes the prohibition, the government will have to establish the relevant terms and conditions.