Bus Tolling for Urban Transit System Management

Abstract

For transit services operated by competitive private companies, as in Hong Kong, the objectives of the companies are not to minimize the total traveler and/or infrastructure costs, but to optimize their profits. Other than engaging in a Bertrand Game, companies may also compete via their service frequencies. As evident in Hong Kong, the intense competition has led to a very visible phenomenon - companies putting more and more buses on major (profitable) corridors, leading to significant increases in congestion. This study aims to analyze externality pricing through bus tolling to manage the congestion caused by them. The result shows that bus tolling can be a promising tool.