EconPapers    
Economics at your fingertips  
 

Congestion, diseconomies of scale and subsidies in urban public transportation

Nicolas Coulombel and Guillaume Monchambert

Working Papers from HAL

Abstract: Subsidization of urban public transportation systems is often motivated by economies of scale and/or second-best considerations (underpriced road alternative). We model a public transportation system subject to frictions between users, users and vehicles, and vehicles. We derive the monopolistic and optimal provisions of supply. We show that if demand exceeds a first threshold, the system enters a congested regime and service frequency decreases. If demand exceeds a second threshold, the public transit system operates under diseconomies of scale, calling for a Pigovian tax instead of a subsidy. This finding, which goes against Mohring's classical rule (1972), holds with an untolled road alternative. We estimate the model for the London Piccadilly lane and find evidence of substantial diseconomies of scale during the morning peak, questioning current subsidy policies for the busiest transit lines.

Keywords: mass transit; congestion; externality; Mohring effect; London Piccadilly lane (search for similar items in EconPapers)
Date: 2019-12-02
New Economics Papers: this item is included in nep-tre and nep-ure
Note: View the original document on HAL open archive server: https://hal.science/hal-02373768v2
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://hal.science/hal-02373768v2/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-02373768

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:wpaper:hal-02373768