De Borger, Bruno and Fosgerau, Mogens (2012): Information provision by regulated public transport companies. Published in: Transportation Research Part B , Vol. 46, (2012): pp. 492-510.
Download (325kB) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Information provision by regulated public transport companies|
|Keywords:||Optimal information provision; Price regulation; Scheduled services|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R4 - Transportation Economics > R40 - General
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design
|Depositing User:||Mogens Fosgerau|
|Date Deposited:||30. Oct 2012 18:56|
|Last Modified:||22. Aug 2015 21:56|
Arnott, R., de Palma, A., Lindsey, R., 1993. A structural model of peak-period congestion: a traffic bottleneck with elastic demand. American Economic Review 83 (1), 161–179.
Bilotkach, W., Fageda, X., Flores-Fillol, R., 2010. Scheduled service versus personal transportation: the role of distance. Regional Science and Urban Economics 40 (1), 60–72.
Brueckner, J.K., 2004. Network structure and airline scheduling. Journal of Industrial Economics LII (2), 291–312.
Chokler, A., Hon-Snir, S., Kim, M., Shitovitz, B., 2006. Information disadvantage in linear Cournot duopoly with differentiated products. International Journal of Industrial Organization 24 (4), 785–793.
De Borger, B., Van Dender, K., 2006. Prices, capacities and service levels in a congestible Bertrand duopoly. Journal of Urban Economics 60 (2), 264–283.
De Borger, B., Wouters, S., 1998. Transport externalities and optimal pricing and supply decisions in urban transportation: a simulation analysis for Belgium. Regional Science and Urban Economics 28 (2), 163–197.
de Palma, A., Lindsey, R., 2001. Optimal timetables for public transportation. Transportation Research Part B: Methodological 35 (8), 789–813.
Dimitrova, M., Schlee, E.E., 2003. Monopoly, competition and information acquisition. International Journal of Industrial Organization 21 (10), 1623–1642.
Evans, A.W., Morrisson, A.D., 1997. Incorporating accident risk and disruption in economic models of public transport. Journal of Transport Economics and Policy 31 (2), 117–146.
Einy, E., Moreno, P., Shitovitz, B., 2002. Information advantage in Cournot oligopoly. Journal of Economic Theory 106 (1), 151–160.
Farag, S., Lyons, G., 2010. Explaining public transport information use when a car is available: attitude theory empirically investigated. Transportation 37 (6), 897–913.
Fosgerau, M., 2009. The marginal social cost of headway. Transportation Research Part B 43 (8-9), 813–820.
Frankena, M., 1981. The effect of alternative urban transit subsidy formulas. Journal of Public Economics 15 (3), 337–348.
Frankena, M., 1983. The efficiency of public transport objectives and subsidy formulas. Journal of Transport Economics and Policy 17 (1), 67–76.
Gagnepain, Ph., Ivaldi, M., 2002. Incentive regulatory policies: the case of public transit in France. Rand Journal of Economics 33 (4), 605–629.
Iossa, E., Staffolini, F., 2002. Price cap regulation and information acquisition. International Journal of Industrial Organization 20 (7), 1013–1036.
Jansson, J.O., 1980. A simple bus line model for optimization of service frequency and bus size. Journal of Transport Economics and Policy 14 (1), 53–80.
Jansson, K., 1993. Optimal public transport price and service frequency. Journal of Transport Economics and Policy 27 (1), 33–50.
Jara Diaz, S., Gschwender, A., 2003. Towards a general microeconomic model for the operation of public transport. Transport Reviews 23 (4), 453–469.
Kiesel, K., Villas-Boas, S.B., forthcoming. Can information cost affect consumer choice? Nutritional labels in a supermarket experiment. International Journal of Industrial Organization.
Kraus, M., 1989. The welfare gains from pricing road congestion using automatic vehicle identification and on-vehicle meters. Journal of Urban Economics 25 (3), 261–281.
Milgrom, P., 2008. What the seller won’t tell you: persuasion and disclosure in markets. Journal of Economic Perspectives 22 (2), 115–131.
Mohring, H., 1972. Optimization and scale economics in urban bus transportation. The American Economic Review 62 (4), 591–604.
Oum, T.H., Zhang, A., Zhang, Y., 2004. Alternative forms of economic regulation and their efficiency implications for airports. Journal of Transport Economics and Policy 38 (2), 217–246.
Panzar, J.C., 1979. Equilibrium and welfare in unregulated airline markets. American Economic Review 69 (2), 92–95.
Sappington, D.E.M., Weisman, D.L., 1996. Designing Incentive Regulation for the Telecommunications Industry. MIT Press, Cambridge, MA.
Sheshinski, E., 1976. Price, quality and quantity regulation in monopoly situations. Economica 43 (1), 127–137.
Small, K., 1982. The scheduling of consumer activities: work trips. American Economic Review 72 (3), 467–479.
Spence, M.A., 1975. Monopoly, quality and regulation. Bell Journal of Economics and Management Science 6 (2), 417–429.
Viton, P.A., 1983. Pareto-optimal urban transportation equilibria. In: Keeler, T.E. (Ed.), Research in Transportation Economics, vol. 1, no. 1, pp. 75–101.
Vives, X., 2002. Private information, strategic behavior, and efficiency in Cournot markets. Rand Journal of