Modelling producer behaviour in fixed route private transport services

Abstract

Objectives: While fixed route private transport services have grown in prominence in the recent times, there is a dearth of models that specifically tackle pricing in it. The current study aims to model producer behaviour in this model, keeping in mind its peculiar physical characteristics. Methods: This study develops a rational-actor model of the behaviour of producers operating in this market. There is however, an added assumption of the heuristic of least perceptible difference to add behavioural realism to the model. Results: The predictions derived from the model developed in this study include repeated usage of a single type of round-trip for a non-zero interval of time, the convexity of expected-waiting time with respect to changes in prices and a negative relation between external (exogenous) demand at one-point of a path and the price charged at the other. Conclusion: Pricing in this market, due to physical factors, can exhibit unique features as modelled. Keywords: Private Transport; transport Pricing; producer behaviour in transport