The private bus drivers and tuk-tuk drivers decided to go on a “five-day strike” as to raise their voice against the recently increased fines for obstruction of road rules. Their intention was to make the passengers desperate enough to blame the government for their inconveniences. But the strike was called off after two days. Why? People exploit the best opportunities to achieve their self interest. Let’s dig a little deeper and explore economics behind it (based on my experience).
The structure of the system
The transportation of passengers on buses are provided by private bus owners and the government; which is the CTB (Ceylon Transport Board). Although the fares maintained by both, the private and the government sector are equal, the services they give the passengers are not homogeneous. I would wait for 30 minutes for a CTB rather than get on board on a private 154 (Kiribathgoda-Angulana) bus from the university. Then again it’s my preference as the CTB buses travels faster compared to private buses generally identified as “Kotana bus” in native tongue. The private buses usually take one and half hours to travel a 20 km journey where as the CTB buses take the same amount of time to travel 25 km. Although the people find the CTB buses efficient, the private and CTB buses share the same time table in short distances (The bus routes that I’m taking). Due to the limited number of buses owned by the CTB, the short distance bus routes are dominated by the Lanka Private Bus Operators Association. Rather, a monopolistic competition with more dominance.
However, the CTB buses took the daunting task of transporting passengers to Colombo while some preferred taking their private vehicles due to crowded buses mainly because
CTB can’t simply meet the demand of the passengers due to lack of buses. Although they could’ve increased the bus fares to control the demand, and take the most desperate people to work, they didn’t. The negative externalities caused due to the inability to control excess demand was 10-20 people travelling on the foot board, on the roof of buses and more traffic on the road. The positive externalities? Well, the depots were making the best of the opportunity were utilizing their resources to the maximum, as they were not under a constraint to operate their services to a certain schedule. Some of the tuk-tuk drivers who were supposed to protest along with the bus drivers, exploited the option to their benefit by commuting needy passengers who were willing to pay even extra to reach their destination. On the day of the strike, tuk-tuk drivers who were clever enough to understand the inelastic price demand of transportation (the percentage change in quantity demanded in this case is demand for “tuk-tuks” is low when the price is increased; as shown in figure 1.1) took the risk of charging without the meter “on” to increase their revenue.The strik
e was called off within one and a half days where I could see the private buses loading passengers on route 138 near the university
“What went wrong”
The bus drivers’ and bus owners’ analysis on consumer behavior was wrong. The passengers decided to travel either by train, by bus or by their private vehicles regardless of the excessive traffic caused due to reasons I concluded by myself.
- Passengers didn’t find it reasonable to protest against a law that makes the road a safer place for everyone, which made them discourage the strike by getting on with their usual day
-to-day work proving that private bus services are not necessities.
- The utility of the passenger’s pay and his/her work was greater than the inconvenience they had to go through.
- The leaders of the strike made wrong assumptions on their market competitiveness and market share making incorrect assumptions that they have a monopoly in their market.
- The utility of the day’s earnings of the tuk-tuk drivers were greater than the risk they had to take in order for them to get a hire – which was stoning by the bus drivers and bus conductors.
- Most obvious reason, the bus owners and drivers were in debt and they found it disadvantageous for them to lose their earnings rather than fighting against a law which was still on the process of being implemented.
Lessons to be learnt here is the world is in the process of where everything is given a value. Where every decision you make, will give up something else as most of the things including “time” is scarce
. So, in order for people to gain maximum use of their resources is to be efficient in everything they do and to maximize their utility which could be seen in this context where CTB buses and tuk-tuk drivers exploited and gained the maximum benefit out of it. So private buses; you are not in a position to strike as long as,
- you eliminate your competition
- people fight to achieve a certain goal in the society minimizing the externalities caused by the decision
- people are fighting obtain limited resources
- have the freedom to make decisions which benefits themselves.
Up next : WTQ