Subsidies to urban public transport have grown rapidly throughout the world over the past two decades. This trend has been especially pronounceD in the US and West Germany. Since 1970 the combined operating and capital subsidies from all government levels has increased 14-fold in the US and 3-fold in Germany. Subsidies currently cover almost all capital costs and a substantial portion of operating costs as well. In both countries doubts have arisen as regards the desirability of such large subsidies. Extensive economic research has shown that the transit subsidy programme in the US is inefficient. Subsidies are thought to have accelerated cost escalation by encouraging large wage increases, productivity decline, and the expansion or maintenance of extremely unprofitable and underutilized services. The subsidy programme in Germany is encountering problems as well. The paper analyses the differences in transit finance between Germany and the US, with special emphasis on the impacts of subsidies on efficiency and costs. The first part documents differences in organisation, levels of subsidies and methods of distributing them, fare policy, and tax financing of subsidies. The second part examines the impacts of subsidies on fares, service levels, productivity and costs. The principal finding is that subsidies have been far more effective in West Germany, which is probably attributable to the much higher degree of fiscal responsibility of transit decision-makers there. In contrast, most of the subsidy burden in the US is borne by the Federal and state levels of government, whereas operating decisions and investment plans are made by local government officials. For the covering abstract of the seminar see IRRD 286719. (TRRL)

  • Supplemental Notes:
    • Transport Policy. Proceedings of Seminar K held at the PTRC Summer Annual Meeting, University of Sussex, England, 15-18 July 1985, Volume P267.
  • Corporate Authors:

    PTRC Education and Research Services Limited

    110 Strand
    London WC2,   England 
  • Authors:
    • Pucher, J
  • Conference:
  • Publication Date: 1985

Media Info

  • Features: References;
  • Pagination: p. 81-94

Subject/Index Terms

Filing Info

  • Accession Number: 00457326
  • Record Type: Publication
  • Source Agency: Transport Research Laboratory
  • Report/Paper Numbers: Monograph
  • Files: ITRD, TRIS
  • Created Date: Aug 27 2004 10:01PM