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The effect of governmental subsidies and the contractual model on the publicly-owned bus sector in Japan

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  • Sakai, Hiroki
  • Shoji, Kenichi

Abstract

The publicly-owned municipal bus sector that provides local transport in Japan is in a difficult situation because of operating deficits, inefficient operations and management, and budgetary constraints of expanding subsidies, and thus, it needs to be restructured to improve efficiency. This paper investigates the impact of subsidies and contractual settings on the cost structure of the publicly-owned bus sector in Japan. A trans-log cost function has been estimated by pooling cross-sectional data of 527 observations over the time period of 1990-2006 for a cross-section of 31 publicly-owned transport companies in Japan. Our analytical results confirm that governmental subsidies to this sector negatively affect the cost structure, while the contractual model may have a positive impact. We also discuss the implications of these results for Japan's public transport policy.

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  • Sakai, Hiroki & Shoji, Kenichi, 2010. "The effect of governmental subsidies and the contractual model on the publicly-owned bus sector in Japan," Research in Transportation Economics, Elsevier, vol. 29(1), pages 60-71.
    • Handle: RePEc:eee:retrec:v:29:y:2010:i:1:p:60-71
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    1. Mehdi Farsi & Massimo Filippini & Michael Kuenzle, 2006. "Cost Efficiency in Regional Bus Companies: An Application of Alternative Stochastic Frontier Models," Journal of Transport Economics and Policy, University of Bath, vol. 40(1), pages 95-118, January.
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    Cited by:

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    2. Filippini, M. & Koller, M. & Masiero, G., 2015. "Competitive tendering versus performance-based negotiation in Swiss public transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 82(C), pages 158-168.
    3. Maria Nieswand & Matthias Walter, 2010. "Cost Efficiency and Subsidization in German Local Public Bus Transit," Discussion Papers of DIW Berlin 1071, DIW Berlin, German Institute for Economic Research.
    4. Santoso, Djoen San & Yajima, Masaru & Sakamoto, Kunihiro & Kubota, Hisashi, 2012. "Opportunities and strategies for increasing bus ridership in rural Japan: A case study of Hidaka City," Transport Policy, Elsevier, vol. 24(C), pages 320-329.
    5. Xiaohong Chen & Xiang Wang & Hua Zhang & Jia Li, 2014. "The Diversity and Evolution Process of Bus System Performance in Chinese Cities: An Empirical Study," Sustainability, MDPI, vol. 6(11), pages 1-17, November.
    6. Sakai, Hiroki & Takahashi, Yoshinori, 2013. "Ten years after bus deregulation in Japan: An analysis of institutional changes and cost efficiency," Research in Transportation Economics, Elsevier, vol. 39(1), pages 215-225.
    7. Merkert, Rico & Mulley, Corinne & Hakim, Md Mahbubul, 2017. "Determinants of bus rapid transit (BRT) system revenue and effectiveness – A global benchmarking exercise," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 75-88.
    8. Wenqian Zou & Meichen Yu & Shoshi MIZOKAMI, 2019. "Mechanism Design for an Incentive Subsidy Scheme for Bus Transport," Sustainability, MDPI, vol. 11(6), pages 1-13, March.
    9. Holmgren, Johan, 2013. "The efficiency of public transport operations – An evaluation using stochastic frontier analysis," Research in Transportation Economics, Elsevier, vol. 39(1), pages 50-57.

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