IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-02373768.html
   My bibliography  Save this paper

Congestion, diseconomies of scale and subsidies in urban public transportation

Author

Listed:
  • Nicolas Coulombel

    (LVMT - Laboratoire Ville, Mobilité, Transport - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - UPEM - Université Paris-Est Marne-la-Vallée - ENPC - École des Ponts ParisTech)

  • Guillaume Monchambert

    (LAET - Laboratoire Aménagement Économie Transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, UL2 - Université Lumière - Lyon 2)

Abstract

Subsidization of urban public transportation systems is often motivated by economies of scale and/or second-best considerations (underpriced road alternative). We model a public transportation system subject to frictions between users, users and vehicles, and vehicles. We derive the monopolistic and optimal provisions of supply. We show that if demand exceeds a first threshold, the system enters a congested regime and service frequency decreases. If demand exceeds a second threshold, the public transit system operates under diseconomies of scale, calling for a Pigovian tax instead of a subsidy. This finding, which goes against Mohring's classical rule (1972), holds with an untolled road alternative. We estimate the model for the London Piccadilly lane and find evidence of substantial diseconomies of scale during the morning peak, questioning current subsidy policies for the busiest transit lines.

Suggested Citation

  • Nicolas Coulombel & Guillaume Monchambert, 2019. "Congestion, diseconomies of scale and subsidies in urban public transportation," Working Papers hal-02373768, HAL.
    • Handle: RePEc:hal:wpaper:hal-02373768
    Note: View the original document on HAL open archive server: https://hal.science/hal-02373768v2
    as

    Download full text from publisher

    File URL: https://hal.science/hal-02373768v2/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sergio R. Jara-Díaz & Antonio Gschwender, 2003. "From the Single Line Model to the Spatial Structure of Transit Services: Corridors or Direct?," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 261-277, May.
    2. Tirachini, Alejandro & Hensher, David A. & Jara-Díaz, Sergio R., 2010. "Restating modal investment priority with an improved model for public transport analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(6), pages 1148-1168, November.
    3. Leonardo J. Basso & Hugo E. Silva, 2014. "Efficiency and Substitutability of Transit Subsidies and Other Urban Transport Policies," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 1-33, November.
    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. Adler, Martin W. & van Ommeren, Jos N., 2016. "Does public transit reduce car travel externalities? Quasi-natural experiments' evidence from transit strikes," Journal of Urban Economics, Elsevier, vol. 92(C), pages 106-119.
    6. De Borger, Bruno & Proost, Stef, 2012. "A political economy model of road pricing," Journal of Urban Economics, Elsevier, vol. 71(1), pages 79-92.
    7. Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2006. "The marginal cost of public funds: Hours of work versus labor force participation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1955-1973, November.
    8. Fosgerau, Mogens, 2009. "The marginal social cost of headway for a scheduled service," Transportation Research Part B: Methodological, Elsevier, vol. 43(8-9), pages 813-820, September.
    9. de Palma, André & Lindsey, Robin & Monchambert, Guillaume, 2017. "The economics of crowding in rail transit," Journal of Urban Economics, Elsevier, vol. 101(C), pages 106-122.
    10. Arnott, Richard & de Palma, Andre & Lindsey, Robin, 1993. "A Structural Model of Peak-Period Congestion: A Traffic Bottleneck with Elastic Demand," American Economic Review, American Economic Association, vol. 83(1), pages 161-179, March.
    11. Matthieu Lapparent & Martin Koning, 2016. "Analyzing time sensitivity to discomfort in the Paris subway: an interval data model approach," Transportation, Springer, vol. 43(5), pages 913-933, September.
    12. Yoshida, Yuichiro, 2008. "Commuter arrivals and optimal service in mass transit: Does queuing behavior at transit stops matter?," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 228-251, May.
    13. Savage, Ian, 2010. "The dynamics of fare and frequency choice in urban transit," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(10), pages 815-829, December.
    14. Silva, Hugo E. & Verhoef, Erik T., 2013. "Optimal pricing of flights and passengers at congested airports and the efficiency of atomistic charges," Journal of Public Economics, Elsevier, vol. 106(C), pages 1-13.
    15. Abrantes, Pedro A.L. & Wardman, Mark R., 2011. "Meta-analysis of UK values of travel time: An update," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(1), pages 1-17, January.
    16. Benezech, Vincent & Coulombel, Nicolas, 2013. "The value of service reliability," Transportation Research Part B: Methodological, Elsevier, vol. 58(C), pages 1-15.
    17. Ripplinger, David G. & Bitzan, John D., 2018. "The cost structure of transit in small urban and rural U.S. communities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 176-189.
    18. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
    19. Hugo E. Silva & Erik T. Verhoef, 2011. "Optimal Pricing of Flights and Passengers at Congested Airports: The Efficiency of Atomistic Charges," Tinbergen Institute Discussion Papers 11-179/3, Tinbergen Institute, revised 28 Mar 2013.
    20. Leonardo J. Basso & Sergio R. Jara-Díaz, 2010. "The Case for Subsidisation of Urban Public Transport and the Mohring Effect," Journal of Transport Economics and Policy, University of Bath, vol. 44(3), pages 365-372, September.
    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. Paudel, Jayash, 2021. "Bus ridership and service reliability: The case of public transportation in Western Massachusetts," Transport Policy, Elsevier, vol. 100(C), pages 98-107.
    2. Gutiérrez-Hita, Carlos & de la Cruz, Omar & Ramos-Melero, Rodolfo, 2022. "Infrastructure access charges, service differentiation, and strategic competition in the EU railway passenger market," Transportation Research Part B: Methodological, Elsevier, vol. 164(C), pages 87-104.

    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. Coulombel, Nicolas & Monchambert, Guillaume, 2023. "Diseconomies of scale and subsidies in urban public transportation," Journal of Public Economics, Elsevier, vol. 223(C).
    2. Hörcher, Daniel & Tirachini, Alejandro, 2021. "A review of public transport economics," Economics of Transportation, Elsevier, vol. 25(C).
    3. Zhang, Junlin & Lindsey, Robin & Yang, Hai, 2018. "Public transit service frequency and fares with heterogeneous users under monopoly and alternative regulatory policies," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 190-208.
    4. Basso, Leonardo J. & Feres, Fernando & Silva, Hugo E., 2019. "The efficiency of bus rapid transit (BRT) systems: A dynamic congestion approach," Transportation Research Part B: Methodological, Elsevier, vol. 127(C), pages 47-71.
    5. Davis, Lucas W., 2021. "Estimating the price elasticity of demand for subways: Evidence from Mexico," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    6. Thisse, Jacques-François & Proost, Stef, 2015. "Skilled Cities, Regional Disparities, and Efficient Transport: The state of the art and a research agenda," CEPR Discussion Papers 10790, C.E.P.R. Discussion Papers.
    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.
    8. De Borger, Bruno & Russo, Antonio, 2018. "The political economy of cordon tolls," Journal of Urban Economics, Elsevier, vol. 105(C), pages 133-148.
    9. Verhoef, Erik T. & Silva, Hugo E., 2017. "Dynamic equilibrium at a congestible facility under market power," Transportation Research Part B: Methodological, Elsevier, vol. 105(C), pages 174-192.
    10. Asplund, Disa & Pyddoke, Roger, 2020. "Optimal fares and frequencies for bus services in a small city," Research in Transportation Economics, Elsevier, vol. 80(C).
    11. Yang, Hai & Tang, Yili, 2018. "Managing rail transit peak-hour congestion with a fare-reward scheme," Transportation Research Part B: Methodological, Elsevier, vol. 110(C), pages 122-136.
    12. Verhoef, Erik T., 2017. "Cost recovery of congested infrastructure under market power," Journal of Urban Economics, Elsevier, vol. 101(C), pages 45-56.
    13. Durrmeyer, Isis & Martinez, Nicolas, 2022. "The Welfare Consequences of Urban Traffic Regulations," TSE Working Papers 22-1378, Toulouse School of Economics (TSE).
    14. Guillaume Monchambert & Stef Proost, 2019. "How Efficient are Intercity Railway Prices and Frequencies in Europe?: Comparing a Corridor in Belgium and in France," Journal of Transport Economics and Policy, University of Bath, vol. 53(4), pages 323-32-347.
    15. Hugo E. Silva & Robin Lindsey & André de Palma & Vincent A. C. van den Berg, 2017. "On the Existence and Uniqueness of Equilibrium in the Bottleneck Model with Atomic Users," Transportation Science, INFORMS, vol. 51(3), pages 863-881, August.
    16. De Borger, Bruno & Fosgerau, Mogens, 2012. "Information provision by regulated public transport companies," Transportation Research Part B: Methodological, Elsevier, vol. 46(4), pages 492-510.
    17. Boffa, Federico & Fedele, Alessandro & Iozzi, Alberto, 2023. "Congestion and incentives in the age of driverless fleets," Journal of Urban Economics, Elsevier, vol. 137(C).
    18. Martin W Adler & Federica Liberini & Antonio Russo & Jos N. van Ommeren, 2021. "The congestion relief benefit of public transit: evidence from Rome," Journal of Economic Geography, Oxford University Press, vol. 21(3), pages 397-431.
    19. Yu, Xiaojuan & van den Berg, Vincent A.C. & Verhoef, Erik T. & Li, Zhi-Chun, 2022. "Will all autonomous cars cooperate? Brands’ strategic interactions under dynamic congestion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    20. Ramos, Raúl & Silva, Hugo E., 2023. "Fare evasion in public transport: How does it affect the optimal design and pricing?," Transportation Research Part B: Methodological, Elsevier, vol. 176(C).

    More about this item

    Keywords

    mass transit; congestion; externality; Mohring effect; London Piccadilly lane;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hal:wpaper:hal-02373768. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.