This case study of the Chicago subscription bus phenomenon explores the implications of private transit firms competing in markets traditionally served only by a government monopoly. Focusing on the emergence of privately operated "subscription buses" in an important Chicago public transit corridor, it explores how a shift in riders and resources from the public to the private sector is likely to influence the operating efficiency of transit. Quantitative tools are used to assess the ramifications of competition between public and private transit operators; findings are used to recommend socially desirable legislation and regulatory change. The public sector has frequently accused private sector competitors of "skimming the cream" by offering service only at the height of the peak period and of being "unfair" by using nonunion labor or not providing certain amenities and station facilities. The need for research is considered compounded by the failure of existing studies to address key economic issues at the core of the debate. It is pointed out that many studies provide timely research on the market potential of the private sector and call for the deregulation of the transit industry but that none directly evaluate the long-range implication of allowing private and public firms to compete in urban mass transit. Where the public sector can quickly divest itself of service that becomes unnecessary because of ridership shifts to the private sector, it is pointed out, the prescriptions of these studies are considered well founded. When the public sector has invested heavily in a fixed-guideway system, such as that in Chicago, however, the desirability of allowing private sector firms to operate service on parallel routes is considered more difficult to assess. For insight into economic implications of such competition, the divestiture process of the public carrier is modeled using Interstate Commerce Commission Cost data and an industry cost allocation technique. Labor laws, capital replacement policies, and other factors are considered to estimate potential long-term savings from public carrier service resulting from ridership shifts. Estimates are used to show how a market share shift from public to private is likely to affect operating efficiency of transit services in the corridor. Surveys, interviews, and estimates are used to explore whether the presence of low-cost private operators stimulate publicly financed carriers to contain costs. A mathematical model is built of how competitive forces are likely to foster revised work rules, reduced featherbedding, and lower wage expectations. It is concluded that the findings have important implications for the future role of the private sector in urban transit.

  • Corporate Authors:

    Northwestern University, Evanston

    Department of Industrial Engineering and Management Sciences
    Transportation Center, 1936 Sheridan Road
    Evanston, IL  United States  60208-4040
  • Authors:
    • Schwieterman, J P
  • Publication Date: 1983-11

Media Info

  • Features: Appendices; Figures; References; Tables;
  • Pagination: 78 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00399729
  • Record Type: Publication
  • Report/Paper Numbers: Thesis
  • Files: TRIS
  • Created Date: Oct 31 1985 12:00AM