A comment on 'subsidisation of urban public transport and the Mohring effect'

Ian Savage*, Kenneth A. Small

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

Van Reeven (2008) argues that the Mohring effect is not relevant to the determination of transit subsidies because a profit-maximising monopolist would supply frequencies that are the same as, or greater than, those that are socially optimal. We find that his results depend on the reduction or elimination of the effect of fares on demand, causing optimal prices to be indeterminate within broad ranges. Consequently, his model is an unsatisfactory tool for discussing subsidies in general, and the optimal combination of fare and frequency in particular.

Original languageEnglish (US)
Pages (from-to)373-380
Number of pages8
JournalJournal of Transport Economics and Policy
Volume44
Issue number3
StatePublished - Sep 1 2010

ASJC Scopus subject areas

  • Transportation
  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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