Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation
economics - willingness to pay, economics - subsidy, economics - revenue
Willingness-to-pay, Subsidies, Public transportation, Funding, Urban transport pricing, Transport subsidy
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.
Permission to publish the abstract has been given by Elsevier, copyright remains with them.
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.