Welfare aspects of organization of passenger transport.

The author considers the arguments for and against privatising public transport by presenting an economic analysis of the options. Reasons for intervention in public transport are discussed. A simple economic model is used to analyse the economic outcome of 4 profit maximisation and welfare maximisation scenarios. Special attention is given to the implications of the network effect. A number of case studies are then used as a comparison of competitive tendering procedures. The situation in Stockholm, Goteborg, Copenhagen, London, San Diego and Los Angeles is compared. Aspects considered include reasons for cost reductions, owners hip of assets and vehicles, quality specifications and tendering process.