OPTIMAL FARE ARRANGEMENT AND OPERATIONS FOR DEMAND RESPONSIVE BUS SYSTEM IN SUBURBS

Abstract

Public transportation service is essentially based on the scale economy, which comes from that cost of one vehicle operation can be divided by many passengers sharing that service. Therefore, it becomes very difficult to provide service in the area with low density of demand. Recently, in order to provide transportation service in such low density areas, demand responsive bus(DRB) gathers attention and expectations. This paper discusses the market externalities in DRB system in suburb and show what kind of fare arrangement will be needed to realize the efficiency of the market. At first, we analyze the optimal division of resources between two kinds of buses; demand responsive service and direct trunk line service. Without any fare intervention, people try to overuse of DRB because they neglect the external effects by their calls. Then we try to estimate the amount of the externalities and give information for the additional price for DRB.