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

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