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Public and Private Transit: Evidence from Lagos
Private minibuses dominate transport in many developing country cities. They serve 62% of trips in Lagos, the largest city in sub-Saharan Africa. We collect panel data to measure how private minibuses respond to the rollout of a new public bus network. When the government enters a route, minibuses depart less frequently, driver profits fall, and drivers switch to connected routes, reducing prices. We develop a custom app to estimate how commuters trade off prices and wait times in an RCT. The private response harms commuters on treated routes, who wait longer, but benefits those on connected routes, who face only lower prices. Overall, 10% of the commuter welfare gains of building the public transit system arise from the response of private transit. Drivers lose welfare equal to half of the commuter gains.
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