Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation

Authors

Florian Drevs
Dieter K. Tscheulin
Jörg Lindenmeier
Simone Renner

Document Type

Journal Article

Publication Date

2014

Subject Area

economics - willingness to pay, economics - subsidy, economics - revenue

Keywords

Willingness-to-pay, Subsidies, Public transportation, Funding, Urban transport pricing, Transport subsidy

Abstract

Public transportation throughout the world is highly subsidized. User knowledge about public subsidies may affect their willingness to pay for public transport services and alter demand and related passenger fare revenues. This is especially relevant in view of the increasing availability of information about public subsidies. An empirical study reveals a crowding-in effect, on average, on WTP (willingness to pay) as a result of access to information about public subsidies that generates concerns of fairness. Crowding-out effects also occur, caused by considerations of double financing and free-riding, although they are minor. Study results show that public transportation companies as well as financing institutions should highlight the existence of subsidies to produce crowding-in effects in the WTP for public transportation, to maximize public valuation (WTP) of public transportation. This should increase self-generated revenues of public transportation services.

Rights

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

Comments

Transportation Research Part A Home Page:

http://www.sciencedirect.com/science/journal/09658564

Recommended Citation

Drevs, F., Tscheulin, D.K., Lindenmeier, J., & Renner, S. (2014). Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation. Transportation Research Part A: Policy and Practice, Volume 59, January 2014, Pages 250–261.