IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v32y1998i5p359-375.html
   My bibliography  Save this article

Operating subsidies and performance in public transit: an empirical study

Author

Listed:
  • Karlaftis, Matt G.
  • McCarthy, Patrick

Abstract

Based upon several studies analyzing the effects of public transit subsidies on a system's performance, there is a consensus that public transit subsidies have increased a system's effectiveness but compromized its efficiency and overall performance. In addition to providing an extensive review of recent work on this topic, the present analysis extends prior empirical research in two significant directions. First, this study controls for cross-section heterogeneity and autocorrelation that may otherwise seriously bias the resulting estimates and invalidate statistical tests. Second, in addition to examining the effect of subsidy by source (local, state, and federal), the paper statistically tests for differential subsidy effects by system size, a topic on which the literature has been surprisingly quiet. Based upon an analysis of panel data for fixed route public transit systems in Indiana, subsidies have no general effect on transit performance. Rather, transit system size significantly influences the effect that subsidies, both in total and disaggregated by source, have on performance. Further, a simulation analysis indicates that redistributing subsidies with no change in the total subsidy level will have little impact upon transit performance, a finding which may have important implications for evaluating alternative allocation schemes.

Suggested Citation

  • Karlaftis, Matt G. & McCarthy, Patrick, 1998. "Operating subsidies and performance in public transit: an empirical study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(5), pages 359-375, September.
  • Handle: RePEc:eee:transa:v:32:y:1998:i:5:p:359-375
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(98)00002-0
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    2. Frankena, Mark W., 1987. "Capital-biased subsidies, bureaucratic monitoring, and bus scrapping," Journal of Urban Economics, Elsevier, vol. 21(2), pages 180-193, March.
    3. Benjamin, Julian & Obeng, Kofi, 1990. "The effect of policy and background variables on total factor productivity for public transit," Transportation Research Part B: Methodological, Elsevier, vol. 24(1), pages 1-14, February.
    4. Ryoichi Sakano & Kofi Obeng & G. Azam, 1997. "Subsidies And Inefficiency: Stochastic Frontier Approach," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 113-127, July.
    5. Kim, Moshe & Spiegel, Menahem, 1987. "The effects of lump-sum subsidies on the structure of production and productivity in regulated industries," Journal of Public Economics, Elsevier, vol. 34(1), pages 105-119, October.
    6. Pashigian, B Peter, 1976. "Consequences and Causes of Public Ownership of Urban Transit Facilities," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1239-1259, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simona Bigerna & Paolo Polinori, 2010. "Ambiente operativo ed efficienza nel settore del trasporto pubblico locale in Italia," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2010(3), pages 85-118.
    2. Cinzia Daraio & Marco Diana & Flavia Di Costa & Claudio Leporelli & Giorgio Matteucci & Alberto Nastasi, 2014. "Efficiency and effectiveness in the urban public transport sector: a critical review with directions for future research," DIAG Technical Reports 2014-14, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    3. Maria Nieswand & Matthias Walter, 2010. "Cost Efficiency and Subsidization in German Local Public Bus Transit," Discussion Papers of DIW Berlin 1071, DIW Berlin, German Institute for Economic Research.
    4. Luc Baumstark & Claude Ménard & William Roy & Anne Yvrande-Billon, 2005. "Modes de gestion et efficience des opérateurs dans le secteur des transports urbains de personnes," Post-Print halshs-00103116, HAL.
    5. K. Obeng, 2011. "Indirect production function and the output effect of public transit subsidies," Transportation, Springer, vol. 38(2), pages 191-214, March.
    6. Tolga Ülkü & Vahidin Jeleskovic & Jürgen Müller, 2014. "How scale and institutional setting explain the costs of small airports? -An application of spatial regression analysis," MAGKS Papers on Economics 201435, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Xiaohong Chen & Xiang Wang & Hua Zhang & Jia Li, 2014. "The Diversity and Evolution Process of Bus System Performance in Chinese Cities: An Empirical Study," Sustainability, MDPI, Open Access Journal, vol. 6(11), pages 1-17, November.
    8. Sakai, Hiroki & Takahashi, Yoshinori, 2013. "Ten years after bus deregulation in Japan: An analysis of institutional changes and cost efficiency," Research in Transportation Economics, Elsevier, vol. 39(1), pages 215-225.
    9. Gupta, Sudakshina & Mukherjee, Aparajita, 2013. "Utilization of passenger transport subsidy in Kolkata: A case study of Calcutta State Transport Corporation," Research in Transportation Economics, Elsevier, vol. 38(1), pages 3-10.
    10. Iseki, Hiroyuki, 2010. "Effects of contracting on cost efficiency in US fixed-route bus transit service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(7), pages 457-472, August.
    11. de Grange, Louis & Troncoso, Rodrigo & González, Felipe, 2012. "An empirical evaluation of the impact of three urban transportation policies on transit use," Transport Policy, Elsevier, vol. 22(C), pages 11-19.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:32:y:1998:i:5:p:359-375. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.