Cambridge International as and a level Economics Ebook

162
Cambridge International A Level Economics

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SELF-ASSESSMENT TASK 
7.8
Public transport in Hong Kong
Hong Kong is a very densely populated city of over seven 
million people. It is also relatively aff luent by Asian 
standards yet has a very low level of car ownership at 
around 70 per thousand population. An eff icient public 
transport system is absolutely critical in allowing this 
busy city to function.
Hong Kong has a diverse public transport system 
consisting of modern surface rail (KCR) to the New 
Territories as well as to Guanghou in mainland China. It 
has an extensive mass transit system (MTR), franchised 
bus services, tram services, various ferry services, 
minibuses and public taxis. All are privately owned. 
Unusually, no subsidies are paid for their operation by 
the Hong Kong government.
In 2007, the KCR and MTR companies were amalgamated to 
form a new integrated company, the MTR Corporation. This 
move was designed to cut out wasteful competition and 
duplication while providing scope for economies of scale. 
It was also seen as a way of generating new investment in 
the rail system, not least because of the extensive property 
portfolio owned by the MTR Corporation.
Franchised bus services are operated by five large 
companies. Each has its own geographical group of services. 
Fares, frequency levels, types of vehicle, routes and even 
bus stops are all part of the franchise arrangement with the 
government. There are a few pinch points and stretches of 
route where they compete with each other.
The famous Star Ferry, with cross-harbour services, and 
the Hong Kong Tramways Company on Hong Kong Island 
are long-established operators that charge very low fares 
and have a unique brand and a loyal customer base. They 
are the only providers of their modes of transport although 
buses and taxis as well as private cars compete with them. 
Victoria Harbour has three privately operated road tunnels, 
the oldest and most congested of which is the Cross 
Harbour Tunnel. The tolls charged are competitive.
Hong Kong has 4,400 minibuses, known locally as public 
light buses. The 2,800 green-topped ones can carry 16 
seated passengers on fixed routes. The remaining red ones 
are more flexible and not as strictly regulated. The fares 
charged are competitive and can be determined by the 
driver. Many are owned by the driver or by small companies.
Finally, Hong Kong has 15,000 red urban Toyota taxis. 
Fares are strictly regulated by meter and vehicle numbers 
fixed by the government. Most are privately owned or 
leased from small local companies by their drivers.
Read the feature below and then answer the questions that follow.
1
Use the evidence above to provide examples 
of monopoly, natural monopoly, oligopoly 
and monopolistic competition. Justify your 
answers.