Role of governance in the achievement of 20-fold increase in bus ridership – A case study of Taichung City

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In the face of continuing development and the demands associated with the active lifestyle of its residents, the Taichung City Government needed to construct a complete public transportation network with high quality bus service. Since 2002, the Taichung City Government has proposed a series of reforms to gradually improve bus operations. As a result, bus ridership grew more than 20 times from 13,000 per day in 2001 to 330,000 per day in 2014. These successful reforms have led to increased public acceptance of bus service and created a win-win-win situation for the government, the public and the bus companies. The main purpose of this paper is to analyze the crucial strategies and policies that resulted in the successful implementation of bus reforms in Taichung City. The causes and effects, in terms of new institutional economics, are also discussed. The results showed that before the implementation of reforms, the Taichung bus market was locked in a vicious cycle. The Taichung City Government re-shaped the market structure through fare adjustment, electronic fare payment, subsidies and promotional efforts. Through institutional change, a new market-oriented framework was created. Institutional change is a gradual process that involves numerous interactions among relevant parties and interest groups. Policy progress is not made by the government alone, but rather through limited consensus among interest groups. The results of this paper also suggested that the government play the role of initiator of a new institutional environment and provide direction for institutional evolution. The case of Taichung City bus reform provides a good reference for similar-sized cities planning to upgrade or reform their public transportation system.