Putting our money to good use: Can we attract more passengers without increasing subsidies?


Johan Holmgren

Document Type

Journal Article

Publication Date


Subject Area

economics - subsidy, ridership - demand, economics - pricing, place - europe, policy - fares, ridership - growth


Public transport, Demand, Supply, Fare, Subsidies, Maximisation;, Elasticity


This paper evaluates the policy of Swedish public transport authorities, determining whether the number of trips on local public transport could have been increased without increasing subsidies. Based on annual data from Swedish counties, the evaluation found that between 1986 and 2001 public transport fares exceeded the passenger-maximising fare most of the time in all but two counties, the average deviation being 1–215%. Evaluating the alternative, passenger-maximising policy, including both fare and service changes for 2001, demonstrated that demand for local public transport in Swedish counties could have been increased by 0–178% without increasing subsidies. Aggregated, this represents a 2.3% increase in the number of trips on local public transport in Sweden.


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


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