Econ 156 Real Estate Economics, Foldvary
from the book: Curb Rights
"Transit" means nonautomobility.
Edge Transit Services - having neither a schedule nor a route.
Taxis. Commuter services. Shuttles.
Bayporter to airport - not a route, since has individual pickup.
Taxis are a prominent mode of transit.
Taxis carry 40% more transit than all other transit combined.
Municipal authorities regulate them extensively.
This regulation has two effects:
1) Regulation reduces the number of legal taxis, restricts ridership, increases waiting time, and increases concentration.
Entry restrictions result in permits with a high market value.
The monopoly gains go to the first entrants.
2) An underground market in illegal cabs.
Illegal taxicabs.
The "gypsy cab" - usually serve low-income areas poorly served by legal cabs.
They often cruise supermarket parking lots for shoppers arriving by buy and leaving with groceries.
Usually there is no tipping.
Commuter transit services.
Carpools are the most important form of commuter transit.
The most spontaneous type is Advanced public transportation systems APTS matches commuter riding in real time.
It creates on-the-spot one-time carpools.
Picking up riders to cross the bridge free is a local transit form.
Vanpools include lease operators who provide organization and insurance. Vanpools are the most important unsubsidized private commuter service aside from carpools.
States and localities regulate commuter services.
A service must show a "public need".
Regulators interpret this as: if a route is served by government transit, there is no public need for a private service.
Thus, government service is protected from competition.
Noncommuter door-to-door services
Noncommuter shared-ride door-to-door services are usually summoned by telephone or arranged on a subscription basis.
State regulators commonly obstruct entrepreneurial response to such opportunities.
However, there has been a large growth in private shuttle van companies offering services for children going to events.
There are also airport services such as Bayporter.
These pick up at hotels or by prearrangement, not street hails.
Most airports allot each shuttle company exclusive curb space to pick up passangers.
Firms are able to cultivate brand-name recognition,
and service quality may provide a competitive edge.
The lesson seems to be the judicious use of private curb rights to give foundation to a self-forming order.
Bus Privatization and Deregulation in Great Britain
During the 1980s, the UK privatized and deregulated bus service except in London.
Britain had competitive private bus companies until the 1930s.
The Road Traffic Act of 1930 converted buses into local monopolies.
By the 1980s, the share of travelers had dropped to one-fifth its former share.
The 1985 Transport Act privatized and deregulated busses.
Deregulation was not complete, e.g. jitneying was not permitted.
Operating costs fell by 40% per bus-kilometer.
Labor productivity rose by 42%.
Service levels measured by bus-kilometers rose by 17% (to new routes), which surprised some who predicted less service.
Fares rose by 17%, due to the elimination of subsidies.
Innovation occurred, such as the use of minibuses.
The deregulation had deficient curb rights.
Registering a scheduled bus service does not secure a company a right to the passengers congregating at the curb.
A company running scheduled service may encounter interloping by scheduled carriers who register their own service to arrive just moments before the service of the first firm.
This is called "schedule jockeying".
Passengers waiting at the curb can be snatched up by competitors offering comparable fares.
The incumbent often responded by scheduling service so frequently that the challenger cannot expect to get enought riders to survive. The practice is called "route swamping".
Under the British deregulation, an incumbent will find it worthwhile to invest in attracting passengers out to the curb only if it can secure its claim to those passengers, and it can do this only if it can fend off the schedule-jockeying entrant.
The central failing of British bus deregulation is the difficulty that bus companies have had in appropriating their investment in waiting passengers. The result has been schedule jockeying and route swamping.
There is a deficiency in the property rights framework which results in a tendency towards monopoly.
Also allowing jitneys, with unscheduled service,
to pick up passengers at their own curbs would exert
market discipline on the incumbent.
Unscheduled service enhances transit competition.
Contracting out Bus Service in the United States
Contracting out allows the public sector to retain planning decision making on routes and fares and types of vehicle to be used, while putting production and operations in the hands of cost-conscious private companies.
Contracting typically reduces costs by 10 to 50 percent.
This is competition for the market rather than in the market.
Example: large transit agencies find it convenient to arrange dial-a-ride service for the elderly and handicapped through contracting with the private sector.
Transit agencies that receive federal subsidies are constrained under section 13(c) of the Urban Mass Transit Act from taking actions that would disadvantage transit workers.
So if contracting would lead to layoffs of drivers or reduce their fringe benefits, transit agencies are not allowed to contract out.
Contracting accounts for only 5.1% of nationwide transit spending.
Federal and state subsidies also come with restrictions on employment, purchasing, and service decisions.
A problem of contracting out:
When relationship-specific investments in human and physical assets are needed to support the transaction in question, "contractual assymetry" between the initial winning bidder and nonwinners will emerge during the contract renewal stage.
Contracting does not really guarantee that even the contest for the market will be competitive.
It would be better to devise an appropriate system of property rights to make possible active competition in the market.
A Property Rights Theory of Transit Markets
Jitney operators follow a route but not necessarily a schedule and therefore enjoy efficiencies in being flexible with respect to their own schedules and to changes in weather, congestion, time of day, day or week, and so on.
Passengers waiting for a scheduled bus are generally happy to ride a jitney that charges a comparable fare and goes to the same destination. The interloping jitney is available now, is faster, probably more pleasant, and may offer deviations from its route, perhaps at an extra charge.
Curb rights determine whether jitneying will flourish.
Devising Property Rights for Transit Markets.
Basic concepts:
Scheduled bus service has its curb zones, within which it sets up bus stops. Scheduled service would be protected from interlopers.
Along the same route, jitneys would be permitted to operate.
Their pickup places would be at curbs areas designated as commons.
These commons would make possible market entry for all manner of service providers.
Exclusionary zones may also be defined according to time intervals.
Federal involvement in local transit comes mainly through Federal Transit Administration subsidies. The State and federal governments would eliminnate subsidies and be removed from decision making.
Local officials have a much better understanding of local conditions. There would also be no state or federal money with attached conditions. Each city would be responsible for its own system of curb rights.
If transit has to be locally financed, grandiose schemes and waste such as the Los Angeles Gateway Intermodal Transporation Center would no longer be built. This project cost $325 million for a rail and bus station at the edge of downtown Los Angeles.
Without federal and state funding, local officials would no longer be tempted to pursue urban renewal or job growth with transit project funds.
Complete Deregulation of transit
Authorities require only that a transit service provider have a valid driver's license,
vehicle registration, insurance, and periodic safety inspections.
The automobile should not be indiscriminately favored.
It should pay its way, including the social costs.
This includes highway tolls for congestion.
Public transit would then be more competitive.
Airport taxes could be managed by the airport with uniform rates or multiple taxi stands
and a coordinator to help passengers.
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Bogart, Economics of Cities and Suburbs
Chapter 5 - Intermetropolitan trade
Comparative advantage drives trade.
The gains from trade depend on transportation costs being low.
The extent of trade depends on preferences, city size, and transport costs.
Trade and wages
The real wage is w/p, nominal wage divided by the price level.
The real wage depends on purchasing power.
The wage level depends on the marginal productivity of labor.
Chapter 6 - Factor Abundance and Specialization
The Hecksher-Ohlin theorem. Swedish economists.
Trade is based on differences in factor abundance among economies, reducing the differences.
But not universally so.
US exports are labor-intensive,
while the US economy is capital-intensive.
Trade can substitute for factor mobility, but not perfectly.
Countries are arbitrary arbitrary aggregations of regions and cities
whose endowment of amenities and nontraded goods
are the fundamental determinants
of the location of production and the pattern of trade.