Should Urban Transit Subsidies Be Reduced?
AbstractThis paper derives empirically tractable formulas for the welfare effects of fare adjustments in passenger peak and off-peak rail and bus transit, and for optimal pricing of those services. The formulas account for congestion, pollution, accident externalities, scale economies, and agency adjustment of transit service offerings. We apply them using parameter values for Washington (DC), Los Angeles, and London. The results support the efficiency of the large current fare subsidies; even starting with fares at 50 percent of operating costs, incremental fare reductions are welfare improving in almost all cases. These findings are robust to alternative assumptions and parameters. (JEL L92, R41, R42, R48)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 99 (2009)
Issue (Month): 3 (June)
Other versions of this item:
- Parry, Ian W.H. & Small, Kenneth, 2007. "Should Urban Transit Subsidies Be Reduced?," Discussion Papers dp-07-38, Resources For the Future.
- Ian W.H. Parry & Kenneth A. Small, 2007. "Should Urban Transit Subsidies Be Reduced?," Working Papers 060723, University of California-Irvine, Department of Economics.
- L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
- R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion
- R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Parry, Ian & Small, Kenneth, 2002.
"Does Britain or the United States Have the Right Gasoline Tax?,"
dp-02-12-, Resources For the Future.
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- Glaister, Stephen, 1974. "Generalised Consumer Surplus and Public Transport Pricing," Economic Journal, Royal Economic Society, vol. 84(336), pages 849-67, December.
- Dodgson, J S, 1986. "Benefits of Changes in Urban Public Transport Subsidies in the Major Australian Cities," The Economic Record, The Economic Society of Australia, vol. 62(177), pages 224-35, June.
- Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
- Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-79, March.
- Gunnar Lindberg, 2001. "Traffic Insurance and Accident Externality Charges," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 35(3), pages 399-416, September.
- Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999.
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in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999
- Proost, Stef & Dender, Kurt Van, 2008. "Optimal urban transport pricing in the presence of congestion, economies of density and costly public funds," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1220-1230, November.
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- Kraus, Marvin, 1991. "Discomfort externalities and marginal cost transit fares," Journal of Urban Economics, Elsevier, vol. 29(2), pages 249-259, March.
- Nelson, Peter & Bagliano, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2006.
"Transit in Washington, D.C.: Current Benefits and Optimal Level of Provision,"
dp-06-21, Resources For the Future.
- Nelson, Peter & Baglino, Andrew & Harrington, Winston & Safirova, Elena & Lipman, Abram, 2007. "Transit in Washington, DC: Current benefits and optimal level of provision," Journal of Urban Economics, Elsevier, vol. 62(2), pages 231-251, September.
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