Regulation of the Informal Transport Sector in Rio de Janeiro, Brazil: Welfare Impacts and Policy Analysis

Document Type

Journal Article

Publication Date


Subject Area

land use - impacts, organisation - regulation, mode - mass transit


Welfare economics, Transit, Trade off analysis, Rio de Janeiro (Brazil), Regulation, Public transit, Policy analysis, Mass transit, Local transit, Jitney service, Cost benefit analysis, Comparison studies, Choice models, Case studies, Benefit cost analysis, Alternatives analysis


Informal public transit activity with vans and minibuses has exploded in popularity throughout Brazil over the past decade. Many policies have been proposed to manage the growth of this sector. This study investigates how some of these proposed policies will impact the welfare of the users of the informal systems. A corridor in Rio de Janeiro with substantial informal activity was used as a case study. Measures of welfare changes in a discrete choice framework were used to estimate proposed policies' impacts on users. Eleven candidate policies were evaluated, ranging from the eradication of the informal modes and investment in formal modes, to the legalization of the informal modes. Benefits were compared with costs and the distribution of benefits across income classes was explored. Net benefits from some policies were found to be substantial. Users benefited most from improvements in formal mass transit modes. Policies to foster a competitive environment for the delivery of both informal and formal services also were shown to benefit users. Legalizing the informal sector was found to benefit users slightly but further investments in the sector are probably inefficient. Operating concessions, regulation of vans, and investments in the formal transportation modes appeared to be strategies that reinforce each other, indicating a possible direction for policy makers.