This paper attempts to build up a game-theoretical model which seeks to account for both regulation and deregulation in the long distance market of the bus industry in Taiwan. In the model we treat regulation and deregulation as possible outcomes of an n-person cooperative game with side payments. By assuming that the total political support for a politician is proportional to the sum of the social welfare accruing to consumers and producers who support the politician, and through the manipulation of the core, the Shapley value, and the bargaining set, we conclude that an increase in demand is neither a necessary nor a sufficient condition for deregulation in the long distance market; an improvement in technological conditions is a necessary condition for deregulation; however, only a significant improvement in technological conditions is a necessary and sufficient condition for deregulation.
