McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Chapter 11 Mass Transit

©2009 The McGraw-Hill Companies, All Rights Reserved 11-2 Why do so few commuters use mass transit? When are buses better than rail systems (light and heavy)? What population density is required to support mass transit? How does transit revenue compare to cost? How would deregulation affect transit options? Mass Transit: Introduction

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©2009 The McGraw-Hill Companies, All Rights Reserved 11-5 New York: 25% commuters use public transit Shares %: Chicago, Washington, Philadelphia Trillion-mile club: New York, Chicago, Los Angeles, Washington, San Francisco, Boston, Philadelphia, Boston, Seattle Variation in Ridership Across Metropolitan Areas

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©2009 The McGraw-Hill Companies, All Rights Reserved 11-7 Price elasticity of demand = Time Cost Elasticities Line-haul time (in-vehicle time) = Access time (walk and wait time) = Opportunity cost of transit time Line-haul: 0.50 wage Access time: 1.50 wage Non-commuting trips: more elastic demand in general Elasticities of Demand for Transit

©2009 The McGraw-Hill Companies, All Rights Reserved 11-8 Result: Auto advantage in access time dominates

©2009 The McGraw-Hill Companies, All Rights Reserved 11-9 NY meets minimum for light rail and bus 10 most dense metro areas nearly meet minimum for infrequent bus Few US cities Meet Minimum Densities for Transit

©2009 The McGraw-Hill Companies, All Rights Reserved Bus system: headway (time between buses), space between stops Heavy rail (BART) Mainline (not integrated): riders require other mode for access Widely spaced stations: improves line-haul at expense of access time High access cost of BART limits its advantage over autos Tradeoffs in Transit Service

©2009 The McGraw-Hill Companies, All Rights Reserved Busways improve bus service Increase line-haul speed and increase ridership Increased ridership allows shorter headways Diamond lanes may increase or decrease speed in other lanes High-Occupancy Vehicle Lanes and Busways

©2009 The McGraw-Hill Companies, All Rights Reserved Consider long-run cost of different transit systems Include both capital and operating cost Include both monetary and time cost System Choice: Average Cost of Transit Systems

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©2009 The McGraw-Hill Companies, All Rights Reserved Cost includes private cost (time and $), cost of building road, pollution cost Congestion tax revenue covers cost of optimum road (Chapter 10) Horizontal AC: road widened to accommodate increased traffic Does not include external cost of greenhouse gases or collisions Cost of the Auto System

©2009 The McGraw-Hill Companies, All Rights Reserved Includes private & public and time & monetary cost of systems Negatively sloped Spread fixed costs over more riders Increase in riders shortens headways and distances between stops, decreasing access cost BART is more costly than the bus Higher access cost: Longer headways and greater distances between stops Higher capital cost (25x cost of equivalent bus system) Higher operating cost Cost of the Bus System and BART

©2009 The McGraw-Hill Companies, All Rights Reserved For all volumes studied, BART more costly than integrated bus Heavy rail may be best choice for New York and Chicago? New heavy rail (Washington, Atlanta, Baltimore, Miami): ridership below threshold System Choice

©2009 The McGraw-Hill Companies, All Rights Reserved Higher capital cost: 5x cost ($881m vs. $168m in Long Beach) Higher operating cost: $0.38 (Portland's MAX) > $0.35 for bus Diverts bus passengers: 63% of LA Blue Line former bus riders Feeder buses impose access costs on riders Light Rail vs. Bus System

©2009 The McGraw-Hill Companies, All Rights Reserved Transit Deficits Fairbox Ratio: Fare Revenue / Operating Cost From , Fairbox ratio dropped from 1.02 to 0.35 Low fares and increased wages Increased mileage: service extended to low-density areas Small increase in ridership combined with doubling of employment Increase in peak traffic, requiring more workers idle during off- peak

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©2009 The McGraw-Hill Companies, All Rights Reserved Indivisible inputs generate negatively sloped average cost Economies of volume: more frequent service and lower time cost Marginal principle: MB (from demand) = MC Price = MC generates deficit = (AC- MC) R* Efficient pricing generates deficit Rationale for Transit Subsidies: Figure 11-2

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©2009 The McGraw-Hill Companies, All Rights Reserved Public transit monopoly: firms cannot compete Taxis cannot serve as common carrier Rationale? Prevent cream skimming and undermining cross subsidies for low-volume routes Alternative is to directly subsidize low-volume routes Regulation of Urban Mass Transit

©2009 The McGraw-Hill Companies, All Rights Reserved Local government specifies services and fares, and accepts low bid Cost savings of % Lower cost for firms: low wage, flexible work rules; minibuses Contracting for Transit Services

©2009 The McGraw-Hill Companies, All Rights Reserved Services between automobile and conventional bus Shared-ride taxis (3-4 passengers), jitneys (6-15 passengers) Subscription bus ( passengers) Paratransit

©2009 The McGraw-Hill Companies, All Rights Reserved Transport Act (1985): entry, competitive bidding, lower subsidies Results: more mini-vans, lower costs from lower wages and flexible work rules, elimination of low-volume service Lessons Competition combined with subsidies for low-volume routes Competition generates innovation and cuts costs Policies to foster competition necessary British Experience with Deregulation

©2009 The McGraw-Hill Companies, All Rights Reserved Transit and Land-Use Patterns If they build it (transit system), will they come?

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©2009 The McGraw-Hill Companies, All Rights Reserved Objective: Increase employment near transit stations Clustering negligible outside central business district To increase employment, combine rail transit investment with policies that increase density Transit and Land-Use Patterns: BART Case

©2009 The McGraw-Hill Companies, All Rights Reserved Spatial mismatch not easily addressed with conventional transit systems BART in San Francisco System extended to link suburban jobs with poor central-city areas Link increased Latino employment in jobs close to new transit route No effect on black employment because route less accessible Mass Transit and Poverty