China's Subway Operating Model Study

Compared to the conventional public transportation, metro is a more fast,comfortable, safe, energy-saving and environmentally friendly method of urbanpublic transportation. The development of metro improves the city's traffic situationand brings enormous external benefits to the government, enterprises and residentsalong. But great construction funds, high operation costs and long recovery areneeded to provide the transportation services by metro. This means that thetransportation services by metro is a typical example of natural monopoly products.China encountered many problems such as the shortage of construction funds, andpayments imbalance in metro operation.With the relevant concepts and summary of previous research, this paperintroduces the formation background of metro operating mode in China and analyzesthe Centralized operating mode and its features by industrial organization theory atfirst. According to the need of performance evaluation, this paper selects the HongKong's operating mode on metro as a reference model, and establishes thecomprehensive evaluation system which includes allocation efficiency, economicefficiency and social benefits based on the characters of quasi-public goods and thegovernment's goal. Finally, the empirical analysis of the data shows that thecentralized operating mode on metro which China has adopted, generally speaking,led to lower allocation efficiency and economic efficiency.This paper thinks that, due to the stage of China's economy, economic track,and our mainstream economic theory, the centralized metro operating mode in chinaformed. Although it has been some positive significance, it also produces moreserious problems that the government's strict regulation in this mode can not play anincentive role. Accordingly, this article makes policy recommendations to seek thenecessary prompts.