Should Urban Transit Subsidies Be Reduced ?

  title={Should Urban Transit Subsidies Be Reduced ?},
  author={Ian W. H. Parry and Kenneth A. Small},
This paper derives empirically tractable formulas for the welfare effects of fare adjustments in passenger peak and off-peak rail and bus transit, and for optimal pricing of those services. The formulas account for congestion, pollution, and accident externalities, scale economies, and agency adjustment of transit service offerings. We apply them using parameter values for Washington (D.C.), Los Angeles, and London. The results support the efficiency of the large current fare subsidies; even… CONTINUE READING
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