Bus operators in competition: a directed location approach

TL;DR

This paper introduces a directed Salop model to analyze bus operator competition, revealing how competitive dynamics lead to unsafe driving, congestion, and pollution, and compares these with more cooperative systems.

Contribution

It develops a novel directed Salop model for bus competition, providing theoretical insights into unsafe practices and system efficiency.

Findings

Competition fosters unsafe driving practices.

Cooperative systems can reduce congestion and pollution.

The model supports policy implications for safer, more efficient bus transport.

Abstract

We present a directed variant of Salop (1979) model to analyze bus transport dynamics. The players are operators competing in cooperative and non-cooperative games. Utility, like in most bus concession schemes in emerging countries, is proportional to the total fare collection. Competition for picking up passengers leads to well documented and dangerous driving practices that cause road accidents, traffic congestion and pollution. We obtain theoretical results that support the existence and implementation of such practices, and give a qualitative description of how they come to occur. In addition, our results allow to compare the current or base transport system with a more cooperative one.