On the Welfare Optimal Policies in Demand Responsive Transportation and Shared Taxi Services

This paper presents a model addressing welfare optimal policies, and unique cost structures of demand responsive transportation and shared taxi services. In shared rides, passengers cause external travel time costs for other passengers due to route changes and additional stops. Optimal pricing and trip production policies are studied in three situations: 1) when the fare structure is flat rate; 2) when fares vary according to distance; and 3) when variable travel time promises are considered. The interpretation of the results highlights the fundamental differences between demand responsive transportation and conventional bus and taxi services from the viewpoint of transport policy.