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Quantifying a Financially Sustainable Strategy of Public Transport: Private Capital Investment Considering Passenger Value

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  • Yunqiang Xue

    () (College of Architecture and Civil Engineering, Beijing University of Technology, Beijing 100124, China
    Beijing Collaborative Innovation Center for Metropolitan Transportation, Beijing University of Technology, Beijing 100124, China)

  • Hongzhi Guan

    () (College of Architecture and Civil Engineering, Beijing University of Technology, Beijing 100124, China
    Beijing Collaborative Innovation Center for Metropolitan Transportation, Beijing University of Technology, Beijing 100124, China)

  • Jonathan Corey

    () (ART-Engines Transportation Research Lab, University of Cincinnati, Cincinnati, OH 45220, USA)

  • Heng Wei

    () (ART-Engines Transportation Research Lab, University of Cincinnati, Cincinnati, OH 45220, USA)

  • Hai Yan

    () (Beijing Collaborative Innovation Center for Metropolitan Transportation, Beijing University of Technology, Beijing 100124, China)

Abstract

Releaving traffic congestion by developing public transport as an alternative mode of travel is a common practice all over the world. However, the increasing public transport subsidies have created a financial burden for governments. Encouragingly, private capital supplies an opportunity for public transport in sustainable finance. Previous research mainly focuses on qualitative analysis and money-for-value (MFV) analysis. In this paper, a new investment model is proposed based on the concept ‘passenger value’, and a bi-level programming model (BLPM) is constructed as a quantitative analysis tool. The upper target of BLPM is the total surplus (including the value of time (VOT) of passengers) of the public transport system and the upper constraint is the ticket price. The lower target of BLPM is passenger’s surplus, the lower constraints are service capability and the lowest return rate of the private sector. The public transport of Jinan City, China is taken as a case to quantify the impacts of private capital investment in public transport. Results show that the proposed investment model considering passenger value is superior to the traditional one, and effective private capital investment could increase the total societal benefit of the transportation system. The proposed investment strategy satisfies economic viability and is a financially sustainability strategy. Additionally, travelers should be encouraged to use public transport through improving the service quality and passenger returns. Only in this way can the success rate of the private sector investment in public transport be improved efficiently.

Suggested Citation

  • Yunqiang Xue & Hongzhi Guan & Jonathan Corey & Heng Wei & Hai Yan, 2017. "Quantifying a Financially Sustainable Strategy of Public Transport: Private Capital Investment Considering Passenger Value," Sustainability, MDPI, Open Access Journal, vol. 9(2), pages 1-20, February.
  • Handle: RePEc:gam:jsusta:v:9:y:2017:i:2:p:269-:d:90366
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    References listed on IDEAS

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    More about this item

    Keywords

    public transport; financial sustainability; passenger value; public-private partnerships; bi-level programming; travel mode choice;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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