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Management objectives and the causes of mass transit deficits

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  • Savage, Ian

Abstract

Based on data for the period from 1948 to 1997, exogenous decreases in demand and increases in costs are estimated to have reduced the annual profitability of the Chicago Transit Authority (CTA) by $1 billion. Half of this decline was recouped by reductions in service, increased fares and increased productivity. Even more would have been recouped had the CTA not given away earlier productivity gains during the 1970s. This was during a period when subsidies were increasing rapidly, and seemingly without constraint. When faced with financial challenges, management has preferred to increase fares rather than reduce service levels to the detriment of social welfare.

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  • Savage, Ian, 2004. "Management objectives and the causes of mass transit deficits," Transportation Research Part A: Policy and Practice, Elsevier, vol. 38(3), pages 181-199, March.
    • Handle: RePEc:eee:transa:v:38:y:2004:i:3:p:181-199
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    References listed on IDEAS

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    1. Obeng, K. & Sakano, R., 2002. "Total factor productivity decomposition, input price inefficiencies, and public transit systems," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(1), pages 19-36, January.
    2. Oum, Tae H. & Tretheway, Michael W. & Waters, W. G., 1992. "Concepts, methods and purposes of productivity measurement in transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 26(6), pages 493-505, November.
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    2. Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.
    3. Winston, Clifford & Maheshri, Vikram, 2007. "On the social desirability of urban rail transit systems," Journal of Urban Economics, Elsevier, vol. 62(2), pages 362-382, September.
    4. K. Obeng, 2011. "Indirect production function and the output effect of public transit subsidies," Transportation, Springer, vol. 38(2), pages 191-214, March.
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    6. 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.
    7. Price, Juan José & Gómez-Lobo, Andrés, 2021. "Baumol’s cost disease and urban transport services in Latin America," Transportation Research Part A: Policy and Practice, Elsevier, vol. 149(C), pages 206-225.

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