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

Shanjun Li, Matthew Kahn and Jerry Nickelsburg

No 19964, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: R41 R48 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-ene, nep-res, nep-tre and nep-ure
Note: EEE PE POL
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Published as Li, Shanjun & Kahn, Matthew E. & Nickelsburg, Jerry, 2015. "Public transit bus procurement: The role of energy prices, regulation and federal subsidies," Journal of Urban Economics, Elsevier, vol. 87(C), pages 57-71.

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