Staff Presentation

Title:	Marginal Cost Pricing and Subsidy of Transit in Small Urbanized Areas
Where:	Transportation Research Board, 91st Annual Meeting
When:	Jan 23, 2012
Presenters:	Jeremy Mattson and David Ripplinger
Links:	Download the Presentation (PDF, 589K) View the Recorded Seminar

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Description

This study analyzed economies of scale and density as a rationale for subsidizing transit agencies in small urban areas. A long-run cost model was estimated that included the addition of external costs, such as environmental effects, and benefits. Results show that small urban transit agencies experience economies of scale and density. The study estimated the marginal social cost of providing service and the level of subsidies required to maximize social welfare. The results provide a justification for subsidizing transit. Included in the study is a survey of transit agencies in small urban areas regarding recent changes in fares, service levels, and funding.