Title

The effect of governmental subsidies and the contractual model on the publicly-owned bus sector in Japan

Document Type

Journal Article

Publication Date

2010

Subject Area

economics - operating costs, economics - subsidy, mode - bus, organisation - contracting, place - asia

Keywords

Publicly-owned bus, Cost function, Subsidy, Contracting out

Abstract

The publicly-owned municipal bus sector that provides local transport in Japan is in a difficult situation because of operating deficits, inefficient operations and management, and budgetary constraints of expanding subsidies, and thus, it needs to be restructured to improve efficiency. This paper investigates the impact of subsidies and contractual settings on the cost structure of the publicly-owned bus sector in Japan. A trans-log cost function has been estimated by pooling cross-sectional data of 527 observations over the time period of 1990–2006 for a cross-section of 31 publicly-owned transport companies in Japan. Our analytical results confirm that governmental subsidies to this sector negatively affect the cost structure, while the contractual model may have a positive impact. We also discuss the implications of these results for Japan’s public transport policy.

Rights

Permission to publish the abstract given by Elsevier, copyright remains with them

Comments

Research in Transportation Economics Home Page: http://www.sciencedirect.com/science/journal/07398859