ABSTRACT
The question of the appropriate level of subsidy to urban public transport is one of the more controversial current issues in the field of public finance. This chapter discusses the economics of the issue with reference both to conventional cost-benefit analysis treatment of efficient subsidy and to wider questions of the possible role for privatisation in urban transport. It discusses some of the problems that arise in the traditional economic approach to efficient subsidy. The chapter considers the relationship between recent trends in urban structure and possible areas of interest for privatisation. It then discusses government attitudes towards the financing of urban public transport systems. It is unthinkable that privatisation in urban public transport would involve large-scale, high-quality infrastructure projects on the scale of the Washington DC, San Francisco or Munich systems. If privatisation is to be experimented with, it will at first surely take the form of piecemeal provision of limited-scale services within a larger public system.
