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Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies

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  • Shanjun Li
  • Matthew E. Kahn
  • Jerry Nickelsburg

Abstract

The U.S. public transit system represents a multi-billion dollar industry that provides essential transit services to millions of urban residents. We study the market for new transit buses that features a set of non-profit transit agencies purchasing buses primarily from a few domestic bus makers. Unlike private vehicles, the fuel economy of public buses is irresponsive to fuel price changes. To understand this finding, we build a model of bus fleet management decisions of local transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment suggests that transit agencies: (1) do not respond to energy prices in either their scrappage or purchase decisions; (2) respond to environmental regulations by scrapping diesel buses earlier and switch to natural gas buses; (3) prefer purchasing buses from manufacturers whose assembly plants are located in the same state; (4) exhibit significant brand loyalty or lock-in effects; (5) favor domestically produced buses when they have access to more federal funding.

Suggested Citation

  • Shanjun Li & Matthew E. Kahn & Jerry Nickelsburg, 2014. "Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies," NBER Working Papers 19964, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19964
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. My Three New NBER Papers
      by Matthew Kahn in Environmental and Urban Economics on 2014-03-12 18:11:00
    2. Three New Economics Papers Related to Mitigating Climate Change
      by Matthew E. Kahn in The Reality-Based Community on 2014-03-12 21:20:17
    3. A Southern Economist
      by Matthew Kahn in Environmental and Urban Economics on 2014-04-10 08:57:00
    4. A Review of Public Transit in Los Angeles
      by Matthew Kahn in Environmental and Urban Economics on 2015-03-13 05:56:00

    Citations

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    Cited by:

    1. Michael K. Price, 2014. "Using field experiments to address environmental externalities and resource scarcity: major lessons learned and new directions for future research," Oxford Review of Economic Policy, Oxford University Press, vol. 30(4), pages 621-638.
    2. repec:eee:pubeco:v:154:y:2017:i:c:p:95-121 is not listed on IDEAS
    3. Matthew E. Kahn & Jerry Nickelsburg, 2016. "An Economic Analysis of U.S Airline Fuel Economy Dynamics from 1991 to 2015," NBER Working Papers 22830, National Bureau of Economic Research, Inc.
    4. Rhiannon Jerch & Matthew E. Kahn & Shanjun Li, 2016. "Efficient Local Government Service Provision: The Role of Privatization and Public Sector Unions," NBER Working Papers 22088, National Bureau of Economic Research, Inc.

    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
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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