Understanding the costs of urban rail transport operations

Document Type

Journal Article

Publication Date


Subject Area

place - urban, mode - subway/metro, economics - operating costs


Urban rail transport, Operational costs, Unobserved productivity, Scale economies, Endogeneity


There is considerable variation in the average cost of operations across urban rail transport (or metro) systems. Since metros are typically owned and operated by public authorities, there is a public interest case in understanding the key drivers of their operational costs. This paper estimates short-run cost functions for metro operations using a unique panel dataset from twenty-four metro systems around the world. We use a flexible translog specification and apply dynamic panel generalised method of moments (DPGMM) estimation to control for confounding from observed and unobserved characteristics of metro operations. Our empirical results show that metro systems with a high density of usage are the most cost-efficient. We also find that operational costs fall as metro size increases. These results have important implications for the economic appraisal of metro systems.


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


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