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

Author

Listed:
  • 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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    Cited by:

    1. Daniel Hörcher & Ramandeep Singh & Daniel J. Graham, 2022. "Social distancing in public transport: mobilising new technologies for demand management under the Covid-19 crisis," Transportation, Springer, vol. 49(2), pages 735-764, April.
    2. Asplund, Disa & Pyddoke, Roger, 2020. "Optimal fares and frequencies for bus services in a small city," Research in Transportation Economics, Elsevier, vol. 80(C).
    3. Andor, Mark A. & Dehos, Fabian T. & Gillingham, Kenneth T. & Hansteen, Sven & Tomberg, Lukas, 2025. "Public transport pricing: An evaluation of the 9-Euro ticket and an alternative policy proposal," Economics of Transportation, Elsevier, vol. 42(C).
    4. Lehe, Lewis J. & Pandey, Ayush, 2025. "Market size and fare-free public transit in theory," Transportation Research Part B: Methodological, Elsevier, vol. 199(C).

    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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