On Bus Tolling to Regulate the Urban Transit System

For transit services operated by competitive private companies, as in Hong Kong, the objectives of the companies are not to minimize the total traveler and/or infrastructure construction costs, but to optimize their profits. Other than engaging in a Bertrand Game, companies may also compete via their service frequencies. As evident in Hong Kong, the intense competition has led to a very visible phenomenon — companies putting more and more buses on major (profitable) corridors, leading to significant increases in congestion on them. This study aims to analyze such externality pricing through bus tolling. The result shows that bus tolling can be a promising congestion management tool.