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Subsidies in public transport

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  • van Goeverden, Cees
  • Rietveld, Piet
  • Koelemeijer, Jorine
  • Peeters, Paul

Abstract

The pricing of public transport may range from charging the full price to supplying it for free. The present situation in most European countries is between the two extremes implying a partial cost recovery. In this paper we will explore both extremes on the axis of cost recovery: free public transport, and public transport without subsidies. We start with a discussion of free public transport, and give a short survey of the intentions governments may have with its introduction. After this short survey we discuss in more detail the experiences with free public transport in four real world cases, two from Belgium and two from the Netherlands: the city of Hasselt, the Brussels region (for students), the Leiden-The Hague bus corridor, and free public transport for students in The Netherlands. Then we discuss the other extreme: public transport without subsidies. We start with a short overview of the financial performance of the Dutch public transport systems and an analysis of the impacts of measures to improve the benefit-cost ratios. Then the effects of subsidy suspension in the Netherlands are estimated by developing two scenarios that describe opposite extremes in the hypothetical situation that no subsidies are granted to public transport operators and comparing the outcomes with a reference scenario where continuation of subsidies is assumed. The paper concludes with a discussion of the merits and problems of both pricing policies: free public transport and public transport without subsidies.

Suggested Citation

  • van Goeverden, Cees & Rietveld, Piet & Koelemeijer, Jorine & Peeters, Paul, 2006. "Subsidies in public transport," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 32, pages 5-25.
    • Handle: RePEc:sot:journl:y:2006:i:32:p:5-25
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    References listed on IDEAS

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    1. Emile Quinet & Roger Vickerman, 2004. "Principles of Transport Economics," Books, Edward Elgar Publishing, number 2581.
    2. B. de Borger & K. Kerstens, 2006. "The performance of bus-transit operators," Post-Print hal-00185456, HAL.
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    3. Ioan RADU & Cleopatra SENDROIU & Mihai DEMETER & Florin CAZACU, 2017. "Theoretical And Methodological Issues Regarding Subsidies For Urban Public Transport Operators," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(1), pages 196-210, November.
    4. Andor, Mark Andreas & Dehos, Fabian & Gillingham, Kenneth & Hansteen, Sven & Tomberg, Lukas, 2023. "Public transport pricing: An evaluation of the 9-Euro Ticket and an alternative policy proposal," Ruhr Economic Papers 1045, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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    6. 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.
    7. De Borger, Bruno & Proost, Stef, 2015. "The political economy of public transport pricing and supply decisions," Economics of Transportation, Elsevier, vol. 4(1), pages 95-109.
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    14. Daniel Štraub, 2020. "The Effects of Fare-Free Public Transport: A Lesson from Frýdek-Místek (Czechia)," Sustainability, MDPI, vol. 12(21), pages 1-15, November.
    15. Chlomoudis, C. I. & Pallis, P. L. & Papadimitriou, Stratos & Tzannatos, E. S., 2007. "The liberalisation of maritime transport and the island regions in EU. Evidence from Greece," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 37, pages 1-15.
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