Public transport provision requires substantial organisational efforts, careful planning, financial contributions from the public, and coordination between millions of passengers and staff members in large systems. Efficient resource allocation is critical in its daily operations. Therefore, public transport has been among the most popular subjects in transport economics since the infancy of this discipline. This paper presents an overview of the literature developed over the past half century, including more than 300 important contributions. With a strong methodological orientation, it collects, classifies, and compares the frequently used analytical modelling techniques, thus providing a cookbook for future research and learning efforts. We discuss key findings on optimal capacity provision, pricing, cost recovery and subsidies, externalities, private operations, public service regulation, and cross-cutting subjects, such as interlinks with urban economics, political economy, and emerging mobility technologies.
Public transport, defined in this paper as high-capacity vehicle sharing with fixed routes and schedules, is the backbone of urban transport systems in global cities, especially in densely populated metropolitan areas. It is unlikely that mobility will become completely private in the near future, simply because of the inevitable traffic congestion and the difficulties of storing individual vehicles when they are not in use. In other words, even though technological development may transform the appearance of public transport, the fundamental challenge of coordinating between individual travellers who share vehicles of high capacity will remain. The purpose of public transport economics is to make this coordination more efficient, ensuring optimal resource allocation to unlock all societal benefits of mass mobility.
This work reviews more than 300 papers, including the most influential contributions that shaped our understanding of the economics of public transport over recent decades. The earliest studies date back to the 1960s and the 1970s when advanced quantitative methods were not available to calibrate disaggregate supply models, estimate sophisticated demand models, and simulate policy interventions’ impact on large urban networks. Did public transport economics significantly change over half a century? Interestingly, the main messages and policy recommendations of the economists in this field are still the same. Scale (density) economies, road pricing, substitution with underpriced car use, socially optimal subsidies, and the peak load problem are still on the research agenda in various forms, just like decades ago. However, the prevalence of popular subjects does not imply that theoretical and empirical results have achieved maximum impact on policymaking. Despite the surrounding consensus among members of the scientific community, the links between scale economies and subsidisation or the limitations of public transport pricing in congestion mitigation are not obvious in the wider transport industry, to mention only two examples. One of the challenges of public transport economics as a sub-discipline will emerge in knowledge dissemination and cross-fertilisation with related disciplines and professions. We believe that a critical overview of past research efforts is crucial in making impactful discoveries in the future.