In recent years, operating subsidies in the USA increased considerably in response to public concerns over traffic congestion and air quality. In a panel of more than 600 transit firms over the period from 1991 to 2012, we find no significant relationship between subsidy and ridership. We show that with a larger subsidy, a transit system operates a larger network but less intensively. At the same time, this subsidy influences service supply in such a way that the quality, as perceived by the traveller, suffers. This is reflected by lower costs of production.
Journal of Transport Economics and Policy
Erasmus School of Economics

Reeven, P.V. (Peran Van), & Karamychev, V. (2016). Subsidies and US urban transit ridership. Journal of Transport Economics and Policy, 50(1), 1–20. Retrieved from