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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, 2012. "Information provision by regulated public transport companies," MPRA Paper 42267, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42267
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. Bar-Yosef, Asaf & Martens, Karel & Benenson, Itzhak, 2013. "A model of the vicious cycle of a bus line," Transportation Research Part B: Methodological, Elsevier, vol. 54(C), pages 37-50.
    4. Sayarshad, Hamid R. & Chow, Joseph Y.J., 2015. "A scalable non-myopic dynamic dial-a-ride and pricing problem," Transportation Research Part B: Methodological, Elsevier, vol. 81(P2), pages 539-554.
    5. Fosgerau, Mogens & Jiang, Gege, 2017. "Travel time variability and rational inattention," MPRA Paper 82248, University Library of Munich, Germany.

    More about this item

    Keywords

    Optimal information provision; Price regulation; Scheduled services;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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