Subsidisation of Urban Public Transport and the Mohring Effect

Author: van Reeven, Peran

Source: Journal of Transport Economics and Policy (JTEP), Volume 42, Number 2, May 2008 , pp. 349-359(11)

Publisher: Journal of Transport Economics and Policy

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Abstract:

Mohring (1972) argues that urban public transport exhibits considerable economies of scale if users' waiting time is included in the cost function. The implication is that without subsidisation, frequencies will be lower than socially optimal. This paper analyses this argument and shows that economies of scale do not constitute a justification for general subsidisation of urban public transport. If an operator is allowed to take the demand effect of their pricing and frequency decisions into account, then the profit-maximising frequency is shown to be at least as high as the welfare-maximising frequency.

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Document Type: Research article

Publication date: 2008-05-01

More about this publication?

JTEP is international both in terms of authors and readership. Since it first appeared, more than 650 papers have been published from Europe, North America, the Pacific Rim/Australasia, Africa, Asia, and South America. This international variety is also reflected in the readership.

Published three times a year, the journal covers all modes of transport and a wide variety of economic themes, including: Passenger Transport, Freight Transport, Shipping, Aviation, Transport Infrastructure, Environment & Energy, Traffic, Planning and Policy, Safety, Costs & Pricing, Competition, Evaluation, Productivity, Demand & Elasticities, Service Quality, Economies of Scale, Economics Regulation and Choice.

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