Impact of a Cost Minimisation User Cost Model on Public Transport Subsidy

Peter Tisato ()

No 1991-05, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: We show that optimal public transport subsidy is sensitive to the use of alternative user cost models, and that a model based on cost minimisation principles may lead to an improvement in subsidy estimates. For the case of homogeneous consumers and non-peaked demand, the cost minimisation user cost model yields optimal subsidy estimates which differ by up to 55% from those generated by existing'models. Multiple optimal subsidy equilibria may also exist arising from a kink in the user cost schedule at a critical frequency and a resulting discontinuity in the marginal benefit of frequency enhancement schedule

Keywords: efficiency; economic models; costs; economic equilibrium (search for similar items in EconPapers)
Pages: 42 pages
Date: 1991
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:1991-05

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