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Red bus, green bus: Market organization, driver incentives, safety, and sorting

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  • Rusco, Frank W.
  • Walls, W. David

Abstract

We examine minibus competition in Hong Kong between two similar types of minibus firms: those that operate green minibuses and those that operate red minibuses. The two types of firms are distinguished by their industrial organizations and by the restrictions placed on their operations by government regulators and triad societies. Green minibuses are subject to government fare, level of service, and route regulation, and the drivers are paid a fixed monthly salary. Red minibuses are not subject to government fare, level of service, or route regulations, but they are regulated by triad societies, and their drivers are residual claimants who either own or lease their minibus. The institutional and operational characteristics are used to formulate testable implications on accident rates and journey times based on differing driver behavior under these alternative industrial organizations. The empirical results show that red minibuses have a substantially higher accident rate and lower peak-period journey times than do green minibuses, and that green minibuses have slightly lower journey times in the off-peak period. Efficient sorting may imply that passengers with high values of travel time savings and access to both types of buses may choose to ride red minibuses during peak periods and switch to green minibuses in off-peak periods

Suggested Citation

  • Rusco, Frank W. & Walls, W. David, 2001. "Red bus, green bus: Market organization, driver incentives, safety, and sorting," Research in Transportation Economics, Elsevier, vol. 6(1), pages 121-142, January.
    • Handle: RePEc:eee:retrec:v:6:y:2001:i:1:p:121-142
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    References listed on IDEAS

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    1. Oldale, Alison, 1998. "Local bus deregulation and timetable instability," LSE Research Online Documents on Economics 6756, London School of Economics and Political Science, LSE Library.
    2. Mohring, Herbert, 1983. "Minibuses in urban transportation," Journal of Urban Economics, Elsevier, vol. 14(3), pages 293-317, November.
    3. Alison Oldale, 1998. "Local Bus Deregulation and Timetable Instability," STICERD - Economics of Industry Papers 21, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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    Cited by:

    1. Tiznado, Ignacio & Galilea, Patricia & Delgado, Felipe & Niehaus, Markus, 2014. "Incentive schemes for bus drivers: The case of the public transit system in Santiago, Chile," Research in Transportation Economics, Elsevier, vol. 48(C), pages 77-83.
    2. Leif Sörensen & Jan Schlüter, 2021. "How do contract types and incentives influence driver behavior?−An analysis of the Kigali bus network," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-11, December.

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