Multimodal pricing model in a deficit public transport market: Implication of informal transport

Dhibi Mohamed

doi:10.14254/jsdtl.2021.6-1.5

Abstract

This article explores one of the most important segments of public transport in developing countries, namely informal transport and its relation to the pricing system of public transport. This paper is an extension of the work of Tirachini, A. and Hensher, D.A., who have developed a model to analyze the impact of non-motorized transport on an optimal public transport pricing policy. We are looking at three congested modes of transportation, and we introduce informal transport as an independent mode of transport instead of non-motorized transport in this analysis. Informal transport has never been incorporated into an intercity transport pricing analysis and this is the first one that informal transport has been considered an autonomous mode in a pricing model. We tried to show how the pricing policy would change by considering or ignoring the Informal Transport. We propose three congested modes (Public transport, particular vehicular and informal transport) pricing model that incorporates informal transport and reconstruct the impact of a capacity constraint on optimal public transport prices. Pricing model were developed explaining the first best and second best prices and the changes effects of capacities and frequency of public transport bus.

Highlights

In many developing countries, informal transport plays an integral role in people’s mobility
This paper is an extension of the work of Tirachini, A. and Hensher, D.A., who have developed a model to analyze the impact of non-motorized transport on an optimal public transport pricing policy
In Nairobi, informal transport is the primary mode of transport, about 33% of the total public transport demand was served by Matatus (Takyi, 1990; Cervero, 2000)

Summary

Introduction

We develop a theoretical model, which adds to the literature on the pricing of a congested mode (informal transport) when there is competition between modes that strategically set the price of their transport services (public bus transport). The model fairly accurately reproduces the existing urban situation in most African countries characterized by a supply deficit of public transport, prompting informal transport operators to develop this activity. This model and methodology can be useful in assessing intercity transportation policies in countries with a shortage of public transport systems, and help predict the effects of any regulatory changes or market structure changes (entry of new operators, a new tax).

Literature review

Model assumptions

First best pricing

Second best pricing

Findings

Conclusion