Title

EXPENSE PREFERENCE BEHAVIOR IN PUBLIC TRANSIT SYSTEMS

Authors

K Obeng

Document Type

Journal Article

Publication Date

2000

Subject Area

infrastructure - vehicle, economics - revenue, economics - operating costs, organisation - management, place - urban, mode - mass transit

Keywords

Urban transportation, TSM, Transportation systems management, Transportation system management, Transit vehicle operations, Transit, Subsidies, Public transit, Operating revenues, Operating costs, Mass transit, Local transit, Intracity transportation, Expense preference behavior model, Costs, Cost of operation

Abstract

This paper advances previous research that views transit systems as minimizing their after-subsidy costs. An expense preference behavior model in economics is used, and first-order conditions for the manager are derived. From the first-order conditions, it is formally shown that the decomposition of relative price inefficiency between management behavior and subsidies found in earlier work (Sakano et al, 1997) can be derived from a utility maximizing model, thus placing that decomposition within the shadow price literature. Extensions to the models to calculate expense preference are also presented. Results of the estimated models show that transit systems have expense preference for capital and not labor. This expense preference behavior increases total costs by about 15% and capital subsidies by about 20%.

Comments

Transportation Research Part E Home Page: http://www.sciencedirect.com/science/journal/13665545