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Sustainability 2015, 7(9), 11933-11948; doi:10.3390/su70911933

Designing an Optimal Subsidy Scheme to Reduce Emissions for a Competitive Urban Transport Market

1
School of Urban Rail Transit, Soochow University, Suzhou 215006, China
2
School of economics and management, Tongji University, Shanghai 200092, China
*
Author to whom correspondence should be addressed.
Academic Editor: Thorsten Schuetze
Received: 4 June 2015 / Revised: 12 August 2015 / Accepted: 18 August 2015 / Published: 27 August 2015
(This article belongs to the Special Issue Towards True Smart and Green Cities?)
View Full-Text   |   Download PDF [1335 KB, uploaded 27 August 2015]   |  

Abstract

With the purpose of establishing an effective subsidy scheme to reduce Greenhouse Gas (GHG) emissions, this paper proposes a two-stage game for a competitive urban transport market. In the first stage, the authority determines operating subsidies based on social welfare maximization. Observing the predetermined subsidies, two transit operators set fares and frequencies to maximize their own profits at the second stage. The detailed analytical and numerical analyses demonstrate that of the three proposed subsidy schemes, the joint implementation of trip-based and frequency-related subsidies not only generates the largest welfare gains and makes competitive operators provide equilibrium fares and frequencies, which largely resemble first-best optimal levels but also greatly contributes to reducing Greenhouse Gas (GHG) emissions on major urban transport corridors. View Full-Text
Keywords: optimal subsidy scheme; two-stage Game; degenerate nested Logit model; GHG emission reduction optimal subsidy scheme; two-stage Game; degenerate nested Logit model; GHG emission reduction
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Qin, F.; Zhang, X. Designing an Optimal Subsidy Scheme to Reduce Emissions for a Competitive Urban Transport Market. Sustainability 2015, 7, 11933-11948.

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