IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v23y1995i1p72-94.html
   My bibliography  Save this article

The Intended Relationship Between Federal Operating Subsidy and Cost

Author

Listed:
  • Kofi Obeng

    (North Carolina A&T State University)

  • Golam Azam

    (North Carolina A&T State University)

Abstract

There are many studies, including those of J. Pucher et al. and S. C. Anderson, that found higher costs to be associated with transit operating subsidies. However, none of them investigated the effect of state and local federal subsidy formulas on cost efficiency of transit operations. In this article, the subsidy-cost relationship is derived by using the federal operating subsidy formula directly within the transit firm's optimizing framework, and the resulting system of equations is estimated. Our results demonstrate that there exists a positive cost-subsidy relationship that conforms with the previous studies and that the formula results in very little capital bias.

Suggested Citation

  • Kofi Obeng & Golam Azam, 1995. "The Intended Relationship Between Federal Operating Subsidy and Cost," Public Finance Review, , vol. 23(1), pages 72-94, January.
    • Handle: RePEc:sae:pubfin:v:23:y:1995:i:1:p:72-94
    DOI: 10.1177/109114219502300103
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114219502300103
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114219502300103?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Frankena, Mark W., 1987. "Capital-biased subsidies, bureaucratic monitoring, and bus scrapping," Journal of Urban Economics, Elsevier, vol. 21(2), pages 180-193, March.
    2. Talley, Wayne K., 1988. "An economic theory of the public transit firm," Transportation Research Part B: Methodological, Elsevier, vol. 22(1), pages 45-54, February.
    3. Kim, Moshe & Spiegel, Menahem, 1987. "The effects of lump-sum subsidies on the structure of production and productivity in regulated industries," Journal of Public Economics, Elsevier, vol. 34(1), pages 105-119, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Obeng, K. & Sakano, R. & Naanwaab, C., 2016. "Understanding overall output efficiency in public transit systems: The roles of input regulations, perceived budget and input subsidies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 133-150.
    2. Obeng, K., 2010. "The Deadweight Costs of Public Transit Subsidies," 51st Annual Transportation Research Forum, Arlington, Virginia, March 11-13, 2010 207240, Transportation Research Forum.
    3. Iseki, Hiroyuki, 2010. "Effects of contracting on cost efficiency in US fixed-route bus transit service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(7), pages 457-472, August.
    4. Obeng, Kofi, 2010. "The Deadweight Costs of Operating and Capital Subsidies," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 49(1).
    5. Obeng, K., 2019. "Public transit cost efficiency studies: The impact of non-contracting regulations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 247-258.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karlaftis, Matt G. & McCarthy, Patrick, 1998. "Operating subsidies and performance in public transit: an empirical study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(5), pages 359-375, September.
    2. Ryoichi Sakano & Kofi Obeng & G. Azam, 1997. "Subsidies And Inefficiency: Stochastic Frontier Approach," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 113-127, July.
    3. Avenali, Alessandro & Catalano, Giuseppe & D'Alfonso, Tiziana & Matteucci, Giorgio, 2020. "The allocation of national public resources in the Italian local public bus transport sector," Research in Transportation Economics, Elsevier, vol. 81(C).
    4. Li, Jianling & Wachs, Martin, 2003. "The Effects of Federal Transit Subsidy Policy on Investment Decisions: The Case of San Francisco's Geary Corridor," University of California Transportation Center, Working Papers qt5x2863g2, University of California Transportation Center.
    5. Gwilliam, Ken, 2008. "A review of issues in transit economics," Research in Transportation Economics, Elsevier, vol. 23(1), pages 4-22, January.
    6. K. Obeng, 2011. "Indirect production function and the output effect of public transit subsidies," Transportation, Springer, vol. 38(2), pages 191-214, March.
    7. Obeng, K. & Sakano, R., 2008. "Public transit subsidies, output effect and total factor productivity," Research in Transportation Economics, Elsevier, vol. 23(1), pages 85-98, January.
    8. 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.
    9. Karlaftis, Matthew G., 2003. "Investigating transit production and performance: a programming approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(3), pages 225-240, March.
    10. Takuya Urakami, 2004. "The effects of subsidies on the cost structure of Japanese water supply organizations," ERSA conference papers ersa04p260, European Regional Science Association.
    11. Guo, Qianwen & Sun, Yanshuo & Schonfeld, Paul & Li, Zhongfei, 2021. "Time-dependent transit fare optimization with elastic and spatially distributed demand," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 353-378.
    12. Richard Arnott, 2001. "The Economic Theory of Urban Traffic Congestion: A Microscopic Research Agenda," Boston College Working Papers in Economics 502, Boston College Department of Economics.
    13. 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.
    14. Jianling Li & Martin Wachs, 2004. "The effects of federal transit subsidy policy on investment decisions: The case of San Francisco's Geary Corridor," Transportation, Springer, vol. 31(1), pages 43-67, February.
    15. Richard Arnott, 1994. "Alleviating Traffic Congestion: Alternatives to Road Pricing," Boston College Working Papers in Economics 282., Boston College Department of Economics.
    16. Kranton, Rachel E., 1990. "Pricing, cost recovery, and production efficiency in transport : a critique," Policy Research Working Paper Series 445, The World Bank.
    17. Obeng, K. & Sakano, R. & Naanwaab, C., 2016. "Understanding overall output efficiency in public transit systems: The roles of input regulations, perceived budget and input subsidies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 89(C), pages 133-150.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:23:y:1995:i:1:p:72-94. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.