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An economic theory of the public transit firm
Institution:1. Grupo de Sostenibilidad Urbana y Regional, SUR, Departamento de Ingeniería Civil y Ambiental, Universidad de los Andes, Edificio Mario Laserna Cra 1° Este N° 19ª-40 Bogotá, Colombia;2. Development Planning Unit, University College London, Gower St, London, WC1E 6BT, United Kingdom;1. Department of Civil Engineering/Qatar Transportation and Traffic Safety Center, Qatar University, PO Box 2713, Doha, Qatar;2. Lutgert College of Business, Florida Gulf Coast University, 10485 FGCU Blvd S, Fort Myers, FL 33965, USA;1. School of Economics and Trade, Guangdong University of Foreign Studies, China;2. Trust Department of CITICS Investment Services Company Limited, China;1. Department of Transportation, Philippines;2. School of Management, University of Asia and the Pacific, Philippines;3. Asian Institute of Tourism, University of the Philippines, Philippines;4. GIZ Philippines, Manila, Philippines;5. Mobility Office, Pasig City Government, Pasig City, Philippines
Abstract:This paper presents an economic theory of the public transit firm that considers the public transit firm's operating objectives related to size maximization and cost minimization as well as its operating options and passenger quality-of-service characteristics. The theory indicates that the variables to be used in the performance evaluation of a public transit firm are its operating options and fare. A single measure for transit performance evaluation is the shadow price in maximizing passengers subject to an overall deficit constraint (to be financed by government).
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