  As an emerging travel mode, the modular vehicle system (MVS) is receiving
increasing attention. In particular, the operators could connect multiple
modular vehicles as an assembled bus in response to the temporary demand
varies. Therefore, in this study, the MVS is adopted in the context of
customized bus design to satisfy passengers reserved travel demand. In
addition, to increase the potential of the customized modular bus system, the
transfer among buses can be considered to group the passengers with the same or
close destinations. However, the passengers will not actively transfer as it is
viewed as a disutility. Thus, the appropriate incentivization should be
provided. To this end, we jointly optimize the passenger-route assignment and
the transfer incentivization scheme, in which the transfer demand is considered
elastically under different incentivization. Then, the linearization approaches
are adopted to transform the original nonlinear model into a mixed integer
linear programming model, which can be solved by state-of-the-art solvers. The
experiment on the small network reveals that the performance of the bus system
with an incentivization scheme is better than that without an incentivization
scheme, and the extent of such superiority depends on the total demand level in
the system.
