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.