Equality in Public Transport Competitions: Game-Theoretic Framework for Bus and Taxi Entrepeneurs in Finland

Abstract

A large share of the public transportation services is provided using contests for companies to find a low cost provider of these services. A trend towards smaller units of transportation has been observed, as the demand for increased efficiency and cost minimisation has shifted traditional transportation patterns. This paper provides economic analysis of the current situation in competition for licenses for transportation in Helsinki MA, Finland. The setting for current permit granting can easily lead to discriminating practices between bus operators and taxi companies, which have different environments in which their decision whether to offer services or not is made. In this paper, the current setting is modelled using tools provided by the game theory. Defined qualities and characteristics of different types of companies are converted to monetary values. The setting is analysed to find Nash-equilibrium for the competition situation. The setting mainly consists of legislative, economic and market position factors, which are assessed in terms of each market operator. The principal setting will cover bus and taxi operators, clearly the two dominant groups in the market.