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Other Rationales for Transit Subsidies Exernalities from automobiles: congestion, environmental, collision Los Angeles: Justify operating subsidy of 27% for peak bus Washington DC rail: Justify operating subsidy of 37% for peak rail London: Justify operating subsidy of 50% for peak rail 11-* Incentive Effects of Transit Subsidies Subsidies lead to higher operator cost from excessive compensation misallocation of labor inefficient input mix (capital and labor) Solution: Switch from operator-based subsidy to user-side subsidy (per passenger mile) 11-* Designing a Transit System Long-run perspective: Include capital, operating, and time cost Compare to cost of automobile system Transit options: Heavy rail, light rail, bus System Cost Capital: Laying rails and buying transit vehicles Operating: Labor, fuel, maintenance of vehicles, roads, and rails Time cost of riders 11-* Design Features Mainline vs. integrated: Modal switches increase access time Distance between bus and stops and rail stations: Line-haul time versus access time Frequency of service: Operator cost (capital operating) vs. access time 11-* 11-* Cost of the Auto System Include private cost (time and $), the cost of building road, pollution cost Congestion tax revenue covers cost of optimum road (Chapter 10) Horizontal AC curve: road widened to accommodate increased traffic Does not include external cost of greenhouse gases or collisions 11-* Cost of Bus System and Rapid-Rail System Includes private public and time monetary cost of systems Negatively sloped Conventional scale economies: Spread fixed costs over more riders Mohring economies: Increase in ridership decreases access time cost 11-* Implications Figure 11-4 represents costs for city with residential density typical of US cities Low density (less than 6,000 passenger volume): Auto is most efficient Bus is less costly than BART for all volumes studied Bus has lower access cost (shorter headways distances between stops) Bus has lower capital c
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