Mass Transit

O’Sullivan Chapter 11

Outline of the Chapter

• Analyze some empirical facts about public transit in the United States

• Analyze the commuter’s decision of travel mode

• Analyze the policy maker’s decision to design public transportation

Transit Riders by Income Group

Means of Transportation to Work

Public Transit Ridership

Elasticities of Demand for Transit (O’Sullivan)

• Price elasticity: ε=-0.33• Time Elasticity:

– Line-Haul Portion τ=-0.39– Access Time τ=-0.71

• Value of Travel Time: Commuters value the time spent in transit about half their wage rate

• Noncommuting Trips: Noncommuting travel have higher elasticities than commuting travel.

What does this all means?

• Public transit is quite inelastic: increase in fare price will increase total revenue.

• Better service and higher fares may result in higher transit. People are more sensitive to changes in time than to changes in price:– Increase of frequency and speed of buses and

finances it with higher fares.• Service improvements that decrease

walking and waiting time generate increases in ridership.

Analyzing the commuter’s decision:

1. Choice between public transportation and driving her own car

2. Choice between a bus system or a rail system

Choice between private or public transportation:

• Assume the following parameters:– In vehicle time is valued $0.10 per minute (wage rate is

$12)– Walking and waiting time at 1.5Xwage ($0.30\minute)

How can we get the consumer to ride the bus?

• Raise cost of car driving:– Congestion Tax– Gasoline Tax

• Improve Service– Lower collection and distribution tax– Lower line-haul time

• Lower the cost of public transportation – What if we make it free?

Choice between bus or rail system• Buses:

– Bus headway: period of time between buses on the bus route

– Space between stops: increases line-haul time, but decreases collection and distribution time

• Rail System– Mainline versus integrated systems

• Mainline Systems: Relies on other modes to collect riders

• Integrated System: Entire trip in single vehicle– Spacing between stations (tradeoff between

line-haul and collection time)

Policy Maker’s Design of a Transit System

Designing a transit system

• Auto System:– Cost = Driver’s time + operating cost + public cost– Recall: revenue from congestion tax equals the

cost of the optimum road• Cost of the Bus System:

– Capital Cost + Operating Cost + Pollution Cost + Time Cost of Riders

• BART and Light Rail:– Higher Collection and Distribution Cost– Higher Capital Cost– Higher Operating Cost

Subsidies of Public Transportation

Fare-Box Ratio: The lower the FBR, the larger the shortfall between fare

revenue and operating costs.