Working papers in Transport Economics
Should buses still be subsidized in Stockholm?
(), Chau Man Fung
() and Stef Proost
Abstract: Many public transport services are heavily subsidized. One
of the main justifications of this is the expected beneficial effect on
road congestion. Stockholm introduced congestion pricing in 2006 and the
effects on car and public transport demand were carefully monitored. This
change in prices provides unique estimates on price- and cross-price
elasticities. This paper uses these data to model the optimal pricing,
frequency, bus size and number of bus lanes for a corridor in the presence
of congestion pricing of cars. Results show that the subsidies for peak bus
trips are indeed too high. However, the major welfare benefits of the
reform are due to a decrease in frequencies during the off-peak period and
the use of larger buses.
Keywords: Public transport; Bus fares; Bus lanes; Bus frequency; Subsidies; Congestion pricing; (follow links to similar papers)
JEL-Codes: D61; H54; R41; R48; (follow links to similar papers)
36 pages, January 25, 2016
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