Abstract
Releaving traffic congestion by developing public transport as an alternative mode of travel is a common practice all over the world. However, the increasing public transport subsidies have created a financial burden for governments. Encouragingly, private capital supplies an opportunity for public transport in sustainable finance. Previous research mainly focuses on qualitative analysis and money-for-value (MFV) analysis. In this paper, a new investment model is proposed based on the concept ‘passenger value’, and a bi-level programming model (BLPM) is constructed as a quantitative analysis tool. The upper target of BLPM is the total surplus (including the value of time (VOT) of passengers) of the public transport system and the upper constraint is the ticket price. The lower target of BLPM is passenger’s surplus, the lower constraints are service capability and the lowest return rate of the private sector. The public transport of Jinan City, China is taken as a case to quantify the impacts of private capital investment in public transport. Results show that the proposed investment model considering passenger value is superior to the traditional one, and effective private capital investment could increase the total societal benefit of the transportation system. The proposed investment strategy satisfies economic viability and is a financially sustainability strategy. Additionally, travelers should be encouraged to use public transport through improving the service quality and passenger returns. Only in this way can the success rate of the private sector investment in public transport be improved efficiently.
Highlights
Traffic congestion, increased travel time, and air pollution are serious problems in modern metropolitan areas
Private capital investment in urban public transport is limited in scope [3] to mainly infrastructure construction and operations
There are two types of methods to solve the bi-level programming problem: one method is to transform the bi-level programming model into a single programming model based on the optimal conditions, such as KKT conditions; the other method is to obtain the optimal solution of the lower model under a given variable value of the upper model
Summary
Traffic congestion, increased travel time, and air pollution are serious problems in modern metropolitan areas. Chinese governments at all levels encourage private capital investment in public transport via legislative and regulatory reforms in order to ease the financial pressure [17,20,21,22,23]. Chinese governments encouraged private capital investment in public transport again after 2010. The customer value of passengers (‘passenger value’ for short and the concept is explained in section) is not fully considered when private capital invests in public transport. In the UK, and many other European countries, private sectors are bidding for subsidy payments from the public authority through providing public transport service passenger services [40], because the user charges are not enough for private sectors to achieve financial sustainability [9]. Conclusions, policy recommendations, and further research issues are provided in the last section
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