Oversupply of bus servies due to users’ opportunity cost

Abstract

The COVID-19 crisis makes businesses and their employees to increase remotely work. Since Japan’s workforce is rapidly aging, the shortage of drivers is obvious. Hence many Japanese bus companies sank deeper into the red. Public bus service requires careful planning, coordination between passengers. We extend the existing analytical facility model where bus service is financed by only the users to take account of asymmetry cost due to opportunity cost of bus users. First, we reveal that the consensus would induce the oversupply of bus service. Second, we demonstrate that reducing the moving up cost extends the gap between the efficient and voting outcomes.