An analytical framework for policy interventions to improve informal transport services

Informal transport services play a vital role in filling crucial mobility gaps in public transportation networks, especially in developing countries of Global South. However, government maintains a laissez-faire regulatory posture to leave the transportation mode weakly regulated as well as ignoring the possibilities of constructive engagement to maximize the organizational, regulatory, and social functions. This paper outlines the importance of governmental interventions that can improve the service quality perceptions of informal transport among users and the overall welfare. Specifically, the role of government has been conceptualized to incentivize the Informal Transport through interventions like subsidies (to aggregators/users) or regulate private vehicle ownership via congestions fee. An analytical model has been developed to analyze a mobility market that constitutes a social welfare maximizing government, two profit-maximizing service providers — an informal transport aggregator as well as a ride-hailing platform, and a heterogeneous pool of commuters. Commuter heterogeneity is accounted for byclassifying thecommuter segments as captive, captive-by-choice, and non-captive while evaluating a combination of policy levers (congestion pricing, subsidies for informal transport user, and subsidies for the informal transport operator). Results show that operator subsidies and congestion pricing benefit both Informal Transport provider and the government; user subsidies are most effective in encouraging a modal shift from private to public transportation. However, success hinges on service quality and minimizing user hassle. Incentive-only (i.e., subsidy without pricing) and deterrent-only (i.e., pricing without subsidy) policies are analyzed further to illustrate how individual levers shape commuter choices, mode shifts, and welfare outcomes.