Pricing of Bus Services in an Overcrowded City - A Suggested Policy

24 Pages Posted: 10 Feb 2014

See all articles by Debabrata Datta

Debabrata Datta

Institute of Management Technology, Ghaziabad

Souvik Dhar

NMIMS,Mumbai

Date Written: January 31, 2014

Abstract

The government-owned transport corporations that provide intra city bus service in India suffer from huge loss. Hence it is necessary to improve the earnings of the transport corporations by innovative pricing. This paper looks at the passengers' reservation price for assured seat and builds up a theoritical model, which shows that pricing, based on seat reservation leads to increase in revenue and social welfare. This result is verified by primary survey based empirical study. It is observed that commuters are willing to pay more if seat is guaranteed. This result is important for pricing policy formulation by transport undertakings.

Keywords: Intra city bus transport, Pricing policy, reservation price, social welfare, Consumer surplus, seat reservation

JEL Classification: R48,L92

Suggested Citation

Datta, Debabrata and Dhar, Souvik, Pricing of Bus Services in an Overcrowded City - A Suggested Policy (January 31, 2014). Available at SSRN: https://ssrn.com/abstract=2391825 or http://dx.doi.org/10.2139/ssrn.2391825

Debabrata Datta

Institute of Management Technology, Ghaziabad ( email )

Hapur Road
Rajnagar
Ghaziabad, UP 201001
India
00911203002298 (Phone)

HOME PAGE: http://www.imt.edu

Souvik Dhar (Contact Author)

NMIMS,Mumbai ( email )

Cabin number731,Mithibai college Building,Vile Par
MUMBAI, Maharashtra 400056
India

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