OPTIMAL FARE AND QUALITY IN PASSENGER TRANSPORT UNDER DIFFERENT REGULATORY REGIMES
Berner Larsen and
Terje Andreas Mathisen
Articles, 2013, vol. 40, issue 1
The article studies how travel distance and the weight a transport operator places on profit versus consumer surplus on the one hand, influences the level of fare, quality of transport supply and travellers’ generalised costs on the other hand. The analysis starts with a regulatory regime in which both fare and transport quality are controllable for the transport firm. Secondly, the fare is endogenous for the firm whilst the quality is set by the authorities. Thirdly, the transport firm can control quality when the fare is fixed. The analysis applies power relationships in a general model describing the market for public passenger transport. The study provides relevant knowledge for transport authorities regarding how transport firms with different goal functions respond to changes in regulatory regimes.
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Persistent link: https://EconPapers.repec.org/RePEc:jte:journl:2013:1:40:3
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