Pareto efficient strategies for regulating public transit operations
operations - performance, operations - frequency, operations - crowding, planning - service level, place - asia
Transit regulation, Pareto, efficient frontier, Quantity control, Congestion
This paper investigates how the local authorities could efficiently regulate the public transit, which is operated by a private firm. Both the waiting time at stops and the in-vehicle congestion costs are taken into account to reflect the transit service quality. The Pareto-efficient frontier is derived and three types of regulation strategies, namely Price-cap, Return-on-output and Quantity control, are analyzed and compared. On one hand, although the Price-cap regulation can attract more demand effectively, the private firm will inefficiently supply a lower frequency to keep the cost down. On the other hand, both the Return-on-output (ROO) and Quantity-control regulations are Pareto efficient that can keep the transit system operating along the Pareto-efficient frontier. Especially, Quantity-control regulation seems to be more attractive than ROO as there is no need for the firm’s accounting information. In addition to the investigations on regulation, a new optimal demand-frequency correspondence is also derived that extends the Mohring’s “Square Root Principle” in incorporating transit in-vehicle congestion effects.
Permission to publish the abstract has been given by SpringerLink, copyright remains with them.
Tian, Q., Yang, H., & Huang, H.J. (2011). Pareto efficient strategies for regulating public transit operations. Public Transport, Vol. 3, (3), pp. 199-212.