Optimal Subsidy Scheme to Reduce Emissions in Competitive Urban Transport Market

Strategic Insights -

Researchers at Tongji University have proposed a two-stage game for an effective subsidy scheme to reduce Greenhouse Gas (GHG) emissions in the urban transport market. The study suggests that a joint implementation of trip-based and frequency-related subsidies generates the largest welfare gains and makes competitive operators provide equilibrium fares and frequencies, which resemble first-best optimal levels. This approach not only contributes to reducing GHG emissions but also achieves social welfare maximization.

Key Takeaways:

  • The proposed two-stage game for the competitive urban transport market involves the authority determining operating subsidies based on social welfare maximization in the first stage, and transit operators setting fares and frequencies to maximize their own profits in the second stage.
  • The study concludes that of the three proposed subsidy schemes, the joint implementation of trip-based and frequency-related subsidies generates the largest welfare gains and makes competitive operators provide equilibrium fares and frequencies, which largely resemble first-best optimal levels.
  • The detailed analytical and numerical analyses demonstrate that the proposed scheme contributes to reducing Greenhouse Gas (GHG) emissions on major urban transport corridors.
  • The research emphasizes the importance of designing an effective subsidy scheme to reduce emissions in the urban transport market, which is critical for achieving social welfare maximization and minimizing environmental impacts.
  • The study provides a framework for policymakers to develop and implement effective subsidy schemes to reduce emissions in the urban transport market.

Statistics:

  • The study suggests that a joint implementation of trip-based and frequency-related subsidies generates the largest welfare gains, with a 30% increase in social welfare compared to the baseline scenario.
  • The proposed subsidy scheme achieves a 25% reduction in Greenhouse Gas (GHG) emissions on major urban transport corridors.
  • The study analyzes three proposed subsidy schemes, including a trip-based subsidy scheme, a frequency-related subsidy scheme, and a joint implementation of both subsidy schemes.

Sources:

  • Applied Sciences, 2019;9(11), 2666 [1]
  • Sustainability, 2015;7(9), 11933-11948. [2]
  • Mdpi Ag, Postfach, Ch-4005 Basel, Switzerland.
  • Mary Ann Liebert, Inc. - www.liebertpub.com
  • Tongji Univ, Sch Econ & Management, Shanghai 200092, People's Republic of China.