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Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation

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  • Drevs, Florian
  • Tscheulin, Dieter K.
  • Lindenmeier, Jörg
  • Renner, Simone

Abstract

Public transportation throughout the world is highly subsidized. User knowledge about public subsidies may affect their willingness to pay for public transport services and alter demand and related passenger fare revenues. This is especially relevant in view of the increasing availability of information about public subsidies. An empirical study reveals a crowding-in effect, on average, on WTP (willingness to pay) as a result of access to information about public subsidies that generates concerns of fairness. Crowding-out effects also occur, caused by considerations of double financing and free-riding, although they are minor. Study results show that public transportation companies as well as financing institutions should highlight the existence of subsidies to produce crowding-in effects in the WTP for public transportation, to maximize public valuation (WTP) of public transportation. This should increase self-generated revenues of public transportation services.

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  • Drevs, Florian & Tscheulin, Dieter K. & Lindenmeier, Jörg & Renner, Simone, 2014. "Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 250-261.
    • Handle: RePEc:eee:transa:v:59:y:2014:i:c:p:250-261
    DOI: 10.1016/j.tra.2013.10.023
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    7. Anwar, Rosiwarna & Salehudin, Imam & Mukhlish, Basuki Muhammad & Ririh, Kirana Rukmayuninda, 2015. "Intention to Adopt and Willingness to Pay: Mass Rapid Transit (MRT) System in Greater Jakarta, Indonesia," MPRA Paper 94204, University Library of Munich, Germany, revised 2016.
    8. Xudong Li & Zhongzhen Yang & Feng Lian, 2023. "Optimizing On-Demand Bus Services for Remote Areas," Sustainability, MDPI, vol. 15(9), pages 1-20, April.
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