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Do Small Cities Need More Public Transport Subsidies Than Big Cities?

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  • Maria Börjesson
  • Chau Man Fung
  • Stef Proost
  • Zifei Yan

Abstract

We compare the optimal public transport subsidies for a representative bus corridor in a small city and in a big city in Sweden, derived by assuming optimal pricing, frequency, bus stop spacing, and bus lane policies. The optimal cost-recovery of the buses depends on the relative size of two costs: waiting time and crowding/congestion. In the big city the high crowding cost is dominating, approaching full cost-recovery in the first-best optimum. In the small city the waiting time dominates, implying larger optimal subsidies. The subsidy is also more effective as a redistribution policy in the small city.

Suggested Citation

  • Maria Börjesson & Chau Man Fung & Stef Proost & Zifei Yan, 2019. "Do Small Cities Need More Public Transport Subsidies Than Big Cities?," Journal of Transport Economics and Policy, University of Bath, vol. 53(4), pages 275-27-298.
    • Handle: RePEc:tpe:jtecpo:2019:53:4:275--298
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