The economic use of subsidies for urban mass transportation

The energy crisis and various urban problems stemming from auto congestion, pollution, and the cost of providing public highways have created enormous interest in revitalizing our urban mass transit systems. Currently much is being said and written regarding the efficacy of granting federal, state and/or local operating subsidies. In this article, the author reviews the transit industry's peak capacity problem, and questions the economic wisdom of providing operating subsidies, as some are now being provided, and how most will probably be administered in the near future. An alternative plan suggests the manner in which subsidies can eventually help the transit industry. The article concludes with an analysis of what research efforts are needed in many urban transit systems and how subsidies can be used to support such research.