Overcoming the Downs-Thomson Paradox by transit subsidy policies

Document Type

Journal Article

Publication Date


Subject Area

place - urban, economics - pricing, economics - subsidy, infrastructure - fleet management, ridership - mode choice, policy - congestion


Transit operating schemes, Downs-Thomson Paradox, Departure time and mode choices, Transit subsidy, Road pricing


Consider a competitive highway/transit transportation system in which travelers either drive on the bottleneck-constrained highway or take scheduled trains from home to the workplace in the morning peak hours. This paper explores the impact of bottleneck capacity expansion on transit operating schemes (fleet size and fare) and travelers’ departure time and mode choices. Due to the potential occurrence of the Downs-Thomson (D-T) Paradox after highway capacity expansion, the paper investigates whether the D-T Paradox can be circumvented by implementing transit subsidy policies. The effects of different transit subsidy schemes are explored: subsidizing the transit company (cost subsidy) or the passengers (passenger subsidy) with the financial support from either government funding or road pricing revenue. For each combination of subsidy method and financial sourcing, the condition for overcoming the D-T Paradox is established.


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


Transportation Research Part A Home Page: