Elaborated answer

A firm gained exclusive rights to provide a bus service around a large island ten years ago. The bus service is popular with tourists and locals alike.

The new government has concluded that the current situation is inefficient and has introduced a law that removes the firm's exclusive right to provide bus services to the island at the end of this year. There are no other barriers to entry in this market but significant economies of scale exist.

Need long report analysing the ticket prices and the level of profits for the firm now, and in the following year when the new law is introduced. Which situation is more economically efficient, and which solution will consumers prefer?