IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i14p8041-d596889.html
   My bibliography  Save this article

Analysis of the Evolutionary Game between the Government and Urban Rail Transit Enterprises under the Loss-Subsidy Mode: A Case Study of Beijing

Author

Listed:
  • Chen Yan

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

  • Qiong Tong

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

Abstract

Most of the urban rail transit enterprises in China have high construction and operation costs, while the government imposes price control on their fares, making their revenues unable to cover their costs and thus causing certain losses. In order to ensure the economic sustainability of urban rail transit enterprises, the government then subsidizes their losses. In the context of loss subsidies as the main subsidy mode for urban rail transit, the government regulates whether urban rail transit enterprises waste cost in order to protect social welfare and reduce the financial pressure of subsidies. This paper constructs an evolutionary game model between government regulators and urban rail transit enterprises, establishes replicated dynamic equations to obtain the evolutionary stabilization strategies of the government and urban rail transit enterprises under different situations, and analyzes the effects of various parameters on the cost control behaviors of urban rail transit enterprises under different loss-subsidy modes through numerical simulations. The theoretical study and simulation results show the following: When only the regulatory policy is adopted, the optimal strategy of urban rail transit enterprises may be cost saving or cost wasting under different subsidy models; if only the penalty policy is adopted, the enterprises will choose the cost wasting strategy when the penalty is small, and the enterprises will choose the cost saving strategy when the penalty is large; if only the fixed proportion subsidy model is adopted, no matter how large the proportion k of government subsidies is, the urban the optimal strategy for rail transit enterprises is cost wasting. If only the regressive loss subsidy model is adopted, the different sizes of its various parameter settings will also lead to the enterprises’ choice of cost wasting strategy or cost saving strategy. Therefore, the government should formulate corresponding policies according to different cost control objectives.

Suggested Citation

  • Chen Yan & Qiong Tong, 2021. "Analysis of the Evolutionary Game between the Government and Urban Rail Transit Enterprises under the Loss-Subsidy Mode: A Case Study of Beijing," Sustainability, MDPI, vol. 13(14), pages 1-21, July.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:14:p:8041-:d:596889
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/14/8041/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/14/8041/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
    2. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
    3. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
    4. Nelson, Peter & Baglino, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2007. "Transit in Washington, DC: Current benefits and optimal level of provision," Journal of Urban Economics, Elsevier, vol. 62(2), pages 231-251, September.
    5. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.
    6. Pavón, Nicolás & Rizzi, Luis Ignacio, 2019. "Road infrastructure and public bus transport service provision under different funding schemes: A simulation analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 125(C), pages 89-105.
    7. K. Obeng, 2011. "Indirect production function and the output effect of public transit subsidies," Transportation, Springer, vol. 38(2), pages 191-214, March.
    8. Shengzhong Zhang & Yingmin Yu & Qihong Zhu & Chun Martin Qiu & Aixuan Tian, 2020. "Green Innovation Mode under Carbon Tax and Innovation Subsidy: An Evolutionary Game Analysis for Portfolio Policies," Sustainability, MDPI, vol. 12(4), pages 1-22, February.
    9. Leonardo J. Basso & Sergio R. Jara-Díaz, 2010. "The Case for Subsidisation of Urban Public Transport and the Mohring Effect," Journal of Transport Economics and Policy, University of Bath, vol. 44(3), pages 365-372, September.
    10. Börjesson, Maria & Eliasson, Jonas & Rubensson, Isak, 2020. "Distributional effects of public transport subsidies," Journal of Transport Geography, Elsevier, vol. 84(C).
    11. Ian Savage & Kenneth A. Small, 2010. "A Comment on 'Subsidisation of Urban Public Transport and the Mohring Effect'," Journal of Transport Economics and Policy, University of Bath, vol. 44(3), pages 373-380, September.
    12. James Odeck & Abdulrahim Alkadi, 2004. "The performance of subsidized urban and rural public bus operators: Empirical evidence from Norway," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(3), pages 413-431, September.
    13. Jansson, Kjell & Lang, Harald & Mattsson, Dan, 2008. "Optimal economic interventions in scheduled public transport," Research in Transportation Economics, Elsevier, vol. 23(1), pages 30-40, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Yanshuo & Guo, Qianwen & Schonfeld, Paul & Li, Zhongfei, 2016. "Implications of the cost of public funds in public transit subsidization and regulation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 236-250.
    2. Ljungberg, Anders, 2016. "Marginal cost-pricing in the Swedish transport sector – An efficient and sustainable way of funding local and regional public transport in the future?," Research in Transportation Economics, Elsevier, vol. 59(C), pages 159-166.
    3. Hörcher, Daniel & Tirachini, Alejandro, 2021. "A review of public transport economics," Economics of Transportation, Elsevier, vol. 25(C).
    4. Zhang, Fangni & Yang, Hai & Liu, Wei, 2014. "The Downs–Thomson Paradox with responsive transit service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 70(C), pages 244-263.
    5. Zhang, Junlin & Lindsey, Robin & Yang, Hai, 2018. "Public transit service frequency and fares with heterogeneous users under monopoly and alternative regulatory policies," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 190-208.
    6. Andrés Gómez-Lobo, 2011. "Monopoly, subsidies and the Mohring effect: A synthesis and an extension," Working Papers wp336, University of Chile, Department of Economics.
    7. Moccia, Luigi & Giallombardo, Giovanni & Laporte, Gilbert, 2017. "Models for technology choice in a transit corridor with elastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 733-756.
    8. Coulombel, Nicolas & Monchambert, Guillaume, 2023. "Diseconomies of scale and subsidies in urban public transportation," Journal of Public Economics, Elsevier, vol. 223(C).
    9. Rojo, Marta & dell’Olio, Luigi & Gonzalo-Orden, Hernán & Ibeas, Ángel, 2015. "Inclusion of quality criteria in public bus service contracts in metropolitan areas," Transport Policy, Elsevier, vol. 42(C), pages 52-63.
    10. Wang, Wei (Walker) & Wang, David Z.W. & Zhang, Fangni & Sun, Huijun & Zhang, Wenyi & Wu, Jianjun, 2017. "Overcoming the Downs-Thomson Paradox by transit subsidy policies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 126-147.
    11. Xu, Shu-Xian & Liu, Tian-Liang & Huang, Hai-Jun & Liu, Ronghui, 2018. "Mode choice and railway subsidy in a congested monocentric city with endogenous population distribution," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 413-433.
    12. Ian W. H. Parry & Kenneth A. Small, 2009. "Should Urban Transit Subsidies Be Reduced?," American Economic Review, American Economic Association, vol. 99(3), pages 700-724, June.
    13. Vigren, Andreas & Pyddoke, Roger, 2020. "The impact on bus ridership of passenger incentive contracts in public transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 144-159.
    14. Canca, David & Andrade-Pineda, José Luis & De-Los-Santos, Alicia & González-R, Pedro Luis, 2021. "A quantitative approach for the long-term assessment of Railway Rapid Transit network construction or expansion projects," European Journal of Operational Research, Elsevier, vol. 294(2), pages 604-621.
    15. De Borger, Bruno & Proost, Stef, 2015. "The political economy of public transport pricing and supply decisions," Economics of Transportation, Elsevier, vol. 4(1), pages 95-109.
    16. Jean-Philippe Meloche & Vincent Trotignon & François Vaillancourt, 2021. "Densification ou prolongement des réseaux de transport structurants ? Une recension des écrits sur les coûts et les bénéfices attendus," CIRANO Project Reports 2020rp-28, CIRANO.
    17. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
    18. Noto, Claudio, 2020. "Airport slots, secondary trading, and congestion pricing at an airport with a dominant network airline," Research in Transportation Economics, Elsevier, vol. 79(C).
    19. Avner,Paolo & Mehndiratta,Shomik Raj & Viguie,Vincent & Hallegatte,Stephane & Avner,Paolo & Mehndiratta,Shomik Raj & Viguie,Vincent & Hallegatte,Stephane, 2017. "Buses, houses or cash ? socio-economic, spatial and environmental consequences of reforming public transport subsidies in Buenos Aires," Policy Research Working Paper Series 8166, The World Bank.
    20. Jerch, Rhiannon & Kahn, Matthew E. & Li, Shanjun, 2017. "The efficiency of local government: The role of privatization and public sector unions," Journal of Public Economics, Elsevier, vol. 154(C), pages 95-121.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:14:p:8041-:d:596889. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.