The effect of value-of-time (VOT) distributions on price and quality compet
ition among differentiated bus services in a simple corridor is investigate
d. Three travel modes are considered: private car; higher-quality, higher-f
are minibuses; and lower-fare, lower-quality conventional buses. With a giv
en continuous distribution of VOT, users are assumed to minimize individual
generalized trip cost and divide themselves among the three travel modes t
hat are differentiated in travel time and monetary cost. Competitive equili
brium is established in terms of each bus firm's optimal frequency and opti
mal fare; also, the profitability of the two types of bus service is examin
ed. (C) 2001 Elsevier Science Ltd. All rights reserved.