Impact of Subsidies on Bus Transit System Cost Efficiency

Client: Applied Research Capstone
Faculty: Dick Netzer and Judy Polyne
Team: Susan Gasparo, Laura Hoguet, Lawanna Kimbro, James Solodar
Year: 2003
The Capstone team evaluated the impact of external subsidies on the cost efficiency of bus transit systems in the United States. The work updates previous empirical studies written mainly in the late 1970s and early 1980s that found significant negative impact. The study analyzed a set of annual panel data for approximately 300 bus systems across the late 1990s. Despite the sizeable shifts in organization and structure of mass transit subsidies since the earlier set of subsidies, the research found that external subsidies still result in higher operating costs per passenger miles. The study concludes with several recommendations that may remedy this effect.