Recent economic conditions have forced public transportation agencies across the country to make significant changes to their service and fare structure. At the same time advocates are emphasizing the importance of transit and its role in community livability and sustainability. There are a number of possible justifications for subsidizing transit, including providing mobility for the underprivileged, the existence of subsidies to other modes of travel, or the possibility that transit operates under conditions of economies of scale. This research focuses on economies of scale and density as a rationale for subsidizing transit in small urban areas.

This seminar will present results from a survey of small urban transit agencies regarding recent changes in service levels, fares, and funding; discuss the rationale for subsidizing transit; present cost data for small urban transit systems; focus on economies of scale, marginal cost pricing, and transportation externalities; and present results from a cost model.