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Information provision by regulated public transport companies

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  • DE BORGER, Bruno
  • FOSGERAU, Mogens

Abstract

We study the interaction between pricing, frequency of service and information provision by public transport firms offering scheduled services, and we do so under various regulatory regimes. The model assumes that users can come to the bus stop or rail station at random or they can plan their trips; the fraction of users who plan their trips is endogenous and depends on the frequency of service and on the quality of information provided. Four institutional regimes are considered, reflecting various degrees of government regulation. A numerical example illustrates the theoretical results. Findings include the following. First, fare regulation induces the firm to provide less frequency and less information than is socially optimal. Second, if information and frequency did not affect the number of planning users a higher fare always induces the firm to raise both frequency and the quality of information. With endogenous planning, however, this need not be the case, as the effect of higher fares strongly depends on how frequency and information quality affect the number of planners. Third, a profit-maximizing firm offers more information than a fare-regulated firm. Fourth, if the agency regulates both the fare and the quality of information then more stringent information requirements induce the firm to reduce frequency; this strongly limits the welfare improvement of information regulation. Finally, of all institutional structures considered, socially optimal fares, frequency and quality of information stimulate passengers least to plan their trips, because the high frequency offered reduces the benefits of trip planning.

Suggested Citation

  • DE BORGER, Bruno & FOSGERAU, Mogens, 2011. "Information provision by regulated public transport companies," Working Papers 2011012, University of Antwerp, Faculty of Business and Economics.
  • Handle: RePEc:ant:wpaper:2011012
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    Cited by:

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    6. Hörcher, Daniel & Tirachini, Alejandro, 2021. "A review of public transport economics," Economics of Transportation, Elsevier, vol. 25(C).
    7. Hensher, David A., 2017. "Future bus transport contracts under a mobility as a service (MaaS) regime in the digital age: Are they likely to change?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 98(C), pages 86-96.
    8. Chunqin Zhang & Yuting Hu & Anning Ni & Hongwei Li, 2019. "Compensation Scheme for Self-Employed Bus Service Requisitions in Urban–Rural Passenger Transport," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
    9. Sun, Yanshuo & Gong, Hengye & Guo, Qianwen & Schonfeld, Paul & Li, Zhongfei, 2020. "Regulating a public transit monopoly under asymmetric cost information," Transportation Research Part B: Methodological, Elsevier, vol. 139(C), pages 496-522.
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    11. Zhou, Chang & Tian, Qiong & Wang, David Z.W., 2022. "A novel control strategy in mitigating bus bunching: Utilizing real-time information," Transport Policy, Elsevier, vol. 123(C), pages 1-13.

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    More about this item

    Keywords

    Optimal information provision; Price regulation; Scheduled services;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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