Abstract
The literature on public transit services contracting, emphasizes the need of efficient contracting designs to promote parties’ interest alignment. There is, however, limited research addressing specific incentive mechanisms. The paper contributes to that literature by developing a performance-based model with an embedded incentive bonus/malus (B/M) mechanism for contracting out transit services. Monte Carlo simulation documents that model’s performance appears sensitive to stochastic specification of some of the B/M drivers, and responsive to changes in the contractual performance factors out of the sub-concessionaire’s control. Evidence on the operation of a light-rail transit system designed based on a version of the model, document that it may contribute to promote ridership patronage, increase the average ride, and ultimately promote the economic operating efficiency of the system. Some policy implications are drawn, namely in terms of public funds allocative efficiency, and promotion of social welfare in contracting transit services.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.