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

Maria Börjesson, Chau Man Fung, Stef Proost and Zifei Yan

Journal of Transport Economics and Policy, 2019, vol. 53, issue 4, 275--298

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.

Date: 2019
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Working Paper: Do small cities need more public transport subsidies than big cities? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:tpe:jtecpo:2019:53:4:275--298

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