The welfare effects of nationalization in a mixed duopoly public transport market

Recently, many cities have launched new rail transit lines. Once these new rail transit lines start commercial operation, they will play important roles as competitors to conventional bus services. In this paper, the effects of nationalization on equilibria have been studied in a mixed duopoly public transport market, in which one publicly-owned rail transit operator competes with one private bus operator. Two numerical case studies show the nationalization of a rail transit company is always socially desirable both in Bertrand pricing game in the short run and in Nash non-cooperative game in the long run.