A Study on the Bus Quasi-Public Operating System : Incentive Perspective.
Chae-Yeol Yang
The Bus Quasi-Public Operating System (BQPOS) was introduced to improve the bus service and to promote the public transportation in 2004 firstly in Seoul, and major metropolitan local governments followed suit. The user benefit is evaluated to have increased with the introduction of BQPOS, but there still remains many problems: the lack of transparency in transport income management which is alleged to cause the misappropriation of public subsidy, lack of effort to improve the efficiency by cutting costs. and eventually problem in sustainability of the public subsidy to compensate for the losses in bus companies. This paper analyzes BQPOS using economic model based on Laffont and Tirole(1993), and Gagnepain and Ivaldi(2002), and porposes alternative system and measures to improve the system. The current BQPOS is the 'cost-plus' scheme which does not provide any incentive to improve efficiency, causes many irregularities in the use of subsidy and creates the big burden of administration costs. This paper proposes 'ex-ante fixed lump sum scheme' and intermediate 'linear contract scheme' which will incentivise the managements of the bus companies, and reduce the administration costs and irregularities.
Bus Quasi-Public Operating System (BQPOS),incentice,subsidy,'cost-plus' scheme,ex-ante fixed lump sum scheme'
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