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| Author: | Reeven P. van |
| Title: | Subsidisation of Urban Public Transport and the Mohring Effect |
| Journal: | Journal of Transport Economics and Policy
2008 : MAY, VOL. 42:2 p. 349-359 |
| Index terms: | public transport urban transport |
| Freeterms: | mohring effect subsidisation |
| Language: | eng |
| Abstract: | Mohring (1972) argues that urban public transport exhibits considerable economies of scale if users' waiting time is included in the cost function. The implication is that without subsidisation, frequencies will be lower than socially optimal. This paper analyzes this argument and points that economies of scale do not constitute a justification for general subsidisation of urban public transport. If an operator is allowed to take the demand effect of their pricing and frequency decisions into account, then the profit-maximising frequency is shown to be at least as high as the welfare-maximising frequency. |
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