A Comparative Analysis on Residents’ Reservation Willingness for Bus Service Based on Option Price

Abstract

Population decline is a pressing issue facing Japan and other developed countries. Local governments in Japan are seeking solutions to insure they meet the daily travel demands of the elderly. Although subsidy for local bus companies is a highly practical policy, a careful investigation to determine its reasonable level is required. This paper investigates the option price of local bus services, that is, the willingness of residents to pay to maintain the services and attempts to gain insights on a reasonable level of subsidy for local bus companies. A comparative analysis among age groups and different city size groups was made. The result showed that elderly residents show a higher option price value than younger and middle-age residents.