1. Mass Transit OSullivan Chapter 11

2. Outline of the Chapter Analyze some empirical facts about public transit in the United States Analyze the commuters decision of travel mode Analyze the policy makers decision to design public transportation

3. Transit Riders by Income Group

4. Means of Transportation to Work

5. Public Transit Ridership

6. Elasticities of Demand for Transit (OSullivan) 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.

7. 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.

8. Analyzing the commuters decision: 1. Choice between public transportation and driving her own car 2. Choice between a bus system or a rail system

9. 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)

10. 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?

11. 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)

12. Policy Makers Design of a Transit System

13. Designing a transit system Auto System: –Cost = Drivers 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

14. Subsidies of Public Transportation

15. Fare-Box Ratio: The lower the FBR, the larger the shortfall between fare revenue and operating costs.