A Comment on 'Subsidisation of Urban Public Transport and the Mohring Effect'
AbstractVan Reeven (2008) argues that the Mohring effect is not relevant to the determination of transit subsidies because a profit-maximising monopolist would supply frequencies that are the same as, or greater than, those that are socially optimal. We find that his results depend on the reduction or elimination of the effect of fares on demand, causing optimal prices to be indeterminate within broad ranges. Consequently, his model is an unsatisfactory tool for discussing subsidies in general, and the optimal combination of fare and frequency in particular. © 2010 LSE and the University of Bath
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Bibliographic InfoArticle provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy (JTEP).
Volume (Year): 44 (2010)
Issue (Month): 3 (September)
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Web page: http://www.bath.ac.uk/e-journals/jtep
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- Andrés Gómez-Lobo, 2011. "Monopoly, subsidies and the Mohring effect: A synthesis and an extension," Working Papers wp336, University of Chile, Department of Economics.
- Savage, Ian, 2010. "The dynamics of fare and frequency choice in urban transit," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(10), pages 815-829, December.
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