Bör kollektivtrafik subventioneras?

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Kjell Jansson
Harald Lang
Chris Halldin

This report examines motives for subsidisation of local and regional public transport, based on economic theory and numerical calculations, with the main conclusion that it is economically efficient to subsidise public transport and to increase service frequency where demand is high.

Local and regional public transport in most industrialised countries is subsidised in the range of 40–60 per cent. In Sweden today regional authorities in charge of public transport are subsidising, between 44 and 80 per cent of the costs.

What we regard as the main economic motive for subsidisation is that public transport is characterised by a positive external effect, which commercial operators ignore (is external) due to their need of a financial surplus. This positive external effect, often called the Mohring-effect, is that the passengers waiting times decrease when frequencies are increased which requires the operations to be subsidised. With the optimal level of price and frequency the variable operating costs cannot be covered with ticket revenue, requiring some external form of supplementary financing.

The numerical calculations seek welfare optima for price, service frequency and subsidy with regard to invehicle congestion and waiting times. In order to find the optima a combination of a simulation model and an optimisation model has been applied, where the optimisation model was developed within this project.

Price, frequency and subsidy have been optimised for seven lines with different characteristics in the county of Stockholm, from a bus route low demanded in a rural area to routes with high capacity use: bus line 4 in Stockholm inner city as well as one underground line and one commuter rail line. The methods used are generally useful. They can, however, be expected to yield different results depending on local demand levels, time values and operating costs.

Compared with the initial situation today the welfare optima suggest lower prices for all seven lines, and higher frequency for most, except for bus lines in areas with less population density and low demand.

Sensitivity analyses show that assumptions on waiting time valuations and cost of public funds have large effects on optimal subsidy, price and frequency and for welfare change. With lower valuations of wait time and/or with a higher cost of public funds optimal subsidy is lower, optimal price is higher and optimal frequency is lower.

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