Financing public transport: a spatial model based on city size

Miguel Ruiz-Montañez

European Journal of Management and Business Economics, 2017, vol. 26, issue 1, 112-122

Abstract: Purpose - The purpose of this paper is to investigate the relationships between public transport services and the financial needs. Cities require to be equipped with public transport networks as they are primarily responsible for creation of wealth for countries and to ensure sustainability of urbanization. Once decisions have been taken to design, build and operate such networks, it is equally important to set rules for urban transport financing. Depending on the city size and other factors, authorities allocate resources. Nonetheless, is there a relationship between the size of the city and its public transport financial needs? This paper develops a model to explain such relationships. Design/methodology/approach - The study develops a spatial model, while providing intuition through the use of graphs, to solve the question of the amount of resources allocated for financing the transport services. Findings - It is verified that those financial needs are more than proportional to the size of the city; when a city grows in its number of boroughs, economic funds needed to support public transport have to increase in a greater proportion in comparison to the growth of boroughs growth. The model states a formula valid for explaining the financial needs. Originality/value - The model is interesting as it explains why large metropolitan areas need special financial aid from authorities. Real life shows that big cities like Paris, Berlin or Madrid need extraordinary funds for this purpose, and in most of the cases, specific national laws are required for financing public transport networks in these large metropolitan areas.

Keywords: Public transport; Finance; Subsidies; Transport infrastructures; Spatial model (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ejmbep:ejmbe-07-2017-007

DOI: 10.1108/EJMBE-07-2017-007

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