Interpretation of Equity in a Market of Transit Services in Urban Areas Based on Microeconomics

Abstract

Urban transit systems function as economic allocation mechanisms that determine who receives mobility services, at what cost, and under what constraints. When the interaction between service provision and user demand is misaligned, structural imbalances emerge as service shortages, excess capacity, and inequitable access. Existing transit equity assessments typically evaluate accessibility or inequality while treating demand and supply as independently determined, overlooking the market dynamics that generate these imbalances. This study develops a microeconomic framework that models transit ridership and accessibility cost as jointly determined using simultaneous demand–supply equations across urban tessellated regions. The resulting market equilibrium is a benchmark for identifying and quantifying unfair allocations (UAs) using consumer and producer surplus. The framework is applied to Nicosia’s bus system before and after restructuring. Although the redesigned system increased ridership by 12%, total UAs and per capita distortions intensified, indicating that improvements in patronage do not necessarily correspond with improvements in equity. By explicitly modeling market interactions, the proposed approach provides a systematic and policy-relevant method for evaluating and addressing fairness in urban transit systems.