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User Economies of Scale: Bus Subsidy in Adelaide

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  • PETER TISATO

Abstract

This paper considers the User Economies of Scale public transport subsidy argument, using buses in Adelaide as a case study. The paper: operates at a corridor level: models user choice between random and planned behaviour using a logit model; uses a peak load model; models existing social justice policy; considers the effect of distor‐tionary public finance; and considers the impact of introducing competitive tendering in service delivery. It concludes that current subsidies are significantly higher than can be justified on user economies of scale grounds, and optimal subsidy results are significantly affected by distortionary public finance.

Suggested Citation

  • Peter Tisato, 1997. "User Economies of Scale: Bus Subsidy in Adelaide," The Economic Record, The Economic Society of Australia, vol. 73(223), pages 329-347, December.
    • Handle: RePEc:bla:ecorec:v:73:y:1997:i:223:p:329-347
    DOI: 10.1111/j.1475-4932.1997.tb01006.x
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    References listed on IDEAS

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    1. Tisato, Peter, 1992. "User cost minimisation and transport subsidy," Economics Letters, Elsevier, vol. 39(2), pages 241-247, June.
    2. Mohring, Herbert, 1972. "Optimization and Scale Economies in Urban Bus Transportation," American Economic Review, American Economic Association, vol. 62(4), pages 591-604, September.
    3. J. S. Dodgson, 1986. "Benefits of Changes in Urban Public Transport Subsidies in the Major Australian Cities," The Economic Record, The Economic Society of Australia, vol. 62(2), pages 224-235, June.
    4. Glaister, Stephen & Lewis, Davis, 1978. "An integrated fares policy for transport in London," Journal of Public Economics, Elsevier, vol. 9(3), pages 341-355, June.
    5. Brown,Stephen J. & Sibley,David Sumner, 1986. "The Theory of Public Utility Pricing," Cambridge Books, Cambridge University Press, number 9780521314008, October.
    6. repec:bla:ecorec:v:58:y:1982:i:162:p:253-62 is not listed on IDEAS
    7. Christopher C. Findlay & Robert L. Jones, 1982. "The Marginal Cost of Australian Income Taxation," The Economic Record, The Economic Society of Australia, vol. 58(3), pages 253-262, September.
    8. repec:bla:ecorec:v:71:y:1995:i:213:p:121-31 is not listed on IDEAS
    9. Peter O. Steiner, 1957. "Peak Loads and Efficient Pricing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 71(4), pages 585-610.
    10. John Freebairn, 1995. "Reconsidering the Marginal Welfare Cost of Taxation," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 121-131, June.
    11. Peter Tisato, 1991. "Impact of a Cost Minimisation User Cost Model on Public Transport Subsidy," School of Economics and Public Policy Working Papers 1991-05, University of Adelaide, School of Economics and Public Policy.
    12. repec:bla:ecorec:v:62:y:1986:i:177:p:224-35 is not listed on IDEAS
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    Cited by:

    1. Gwilliam, Ken, 2008. "A review of issues in transit economics," Research in Transportation Economics, Elsevier, vol. 23(1), pages 4-22, January.

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