Competition and regulation in a new integrated transit system across jurisdictional borders

It is often argued lately that some regional transit systems should be integrated to improve the transit services across jurisdictional borders. One of the important issues concerning this integrated transit system is how to make proper use of the competition and regulation to improve its performance and to increase relevant benefits to the authorities, the operators and the passengers. This paper deals with this problem in a new integrated transit system across jurisdictional borders. An optimization model is used to investigate the competition of transit operators in oligopolistic competition transit market (OCTM). An optimization model with nonlinear complementarity constraints is proposed to guide the competition of transit operators using transit subsidy as the regulation means in system optimum transit system (SOTM). By analyzing and comparing the performances of the integrated transit system in two markets, numerical studies show that the competition mechanism should be made full use of and transit subsidy is an important regulation means that should be valued by the transit authorities in the integrated transit system. Copyright © 2016 John Wiley & Sons, Ltd.