Institute of Transportation, MOTC

　　Successful institution or policy change is always hard to achieve because of many unexpected difficulties and uncertainties in the process of reform. The main purpose of this paper is to analyze the crucial strategies and policies for successful institutional reform of a high-potential bus program in Taichung City. It discussed the cases and effects in terms of the new institutional economics. The results show that the original institution design of Taichung bus market had path dependence and were locked in the vicious cycle. However, the Taichung municipal government made market opening, fare adjustment, electric payment, and authoritative promotion efforts. They initiated the institutional change and completely turned it into a new market-oriented framework of the institution; it developed an outstanding outcome. The institutional changing process is a gradual development and it involved numerous interactions and was compromised of associated groups and interested parties. Any policy progress was not straightforwardly programmed by the government but was made from limited consensus from these interested groups. The results suggest that the government could be the pioneer of initiating a new institutional environment and conduct a new direction of institutional evolution. The case of the Taichung high-potential bus program provides a good reference for other cities in Taiwan where they plan to upgrade their transit system or to reform their transportation policy.