It may make sense to price rush hour, to push more traffic to the shoulders. NYC congestion pricing sorta works this way: pricing nights lower than days. So do many toll roads, such as Route 200 in Maryland. But otherwise, I agree--fares are dumb, especially when lower-income folk rely more on public transportation, and fare collection is a fraught issue.
The case for free buses is even stronger than this. Your MC = MR criterion is good as long as there's a single optimum, i.e. convex choice and production sets. But urban transportation and form provide the clearest case of interactive nonconvexity around. Even fairly orthodox neoclassicals, who flee in terror from multiple equilibria in other contexts, recognize its relevance in spatial applications.
What this means is that transportation policy could and should be used as a mechanism to get communities to shift from a mostly-car to a mostly-transit equilibrium. This will take time, so there can be shifts in residential density, the location of commercial centers and other services, employment, etc. It will take years. But the main lever will be transportation, not only greatly subsidizing transit but also massively taxing the energy used for private vehicles -- rebating the proceeds in full, of course. I know this sounds crazy and hyper-radical, and in some ways it is, but it follows logically from the multiple-equilibrium understanding of urban form. In the end, it's about policies to make U.S. cities more like (some) European and Asian ones.
FWIW, there's a big overlap between this program and climate mitigation, once you realize that the rate of carbon emission reduction can't be limited by how much clean energy we can produce in a world of uncapped energy increases. Putting a quantitative lid on emissions (4% per year is a reasonable global reduction rate consistent with Paris) would jack up energy prices, and that's part of the urban form program. And again, rebate the damn carbon revenues. It's fiscally progressive.
There's a bit of discussion on this in my climate book.
Thanks Peter - I ordered your book, would like to consult with you on the Cap Auction and Invest scheme drafted by NY State Dept of Environmental Conservation but not released by Hochul. I am on the policy committee of NY Renews, the labor-community-environmental coalition that led the fight to pass NY's climate law in 2019.
Outstanding essay Max - exemplary socialist analyis: focus on the underlying systemic problem, and kicker at the end. BTW, unlike the stock exchange, commercial real estate can not move away.
An additional point - the individual and social value of time saved by not having to queue up and pay fares one by one is non-trivial. Curitiba Brazil pioneered another way to do that in a fare system: passengers pay to enter express bus mini-stations, with floor at same level as bus floor so accessible, where they wait protected from the weather. Bus doors open like subway doors and boarding is fast and easy. But the transition cost in money and time of converting to the Curitiba model makes eliminating fares clearly preferable.
yeppers!
Awesome
It may make sense to price rush hour, to push more traffic to the shoulders. NYC congestion pricing sorta works this way: pricing nights lower than days. So do many toll roads, such as Route 200 in Maryland. But otherwise, I agree--fares are dumb, especially when lower-income folk rely more on public transportation, and fare collection is a fraught issue.
As I said, the function of fees is to get usage to the correct level.
Max this one cooks !!!
The case for free buses is even stronger than this. Your MC = MR criterion is good as long as there's a single optimum, i.e. convex choice and production sets. But urban transportation and form provide the clearest case of interactive nonconvexity around. Even fairly orthodox neoclassicals, who flee in terror from multiple equilibria in other contexts, recognize its relevance in spatial applications.
What this means is that transportation policy could and should be used as a mechanism to get communities to shift from a mostly-car to a mostly-transit equilibrium. This will take time, so there can be shifts in residential density, the location of commercial centers and other services, employment, etc. It will take years. But the main lever will be transportation, not only greatly subsidizing transit but also massively taxing the energy used for private vehicles -- rebating the proceeds in full, of course. I know this sounds crazy and hyper-radical, and in some ways it is, but it follows logically from the multiple-equilibrium understanding of urban form. In the end, it's about policies to make U.S. cities more like (some) European and Asian ones.
FWIW, there's a big overlap between this program and climate mitigation, once you realize that the rate of carbon emission reduction can't be limited by how much clean energy we can produce in a world of uncapped energy increases. Putting a quantitative lid on emissions (4% per year is a reasonable global reduction rate consistent with Paris) would jack up energy prices, and that's part of the urban form program. And again, rebate the damn carbon revenues. It's fiscally progressive.
There's a bit of discussion on this in my climate book.
Thanks Peter - I ordered your book, would like to consult with you on the Cap Auction and Invest scheme drafted by NY State Dept of Environmental Conservation but not released by Hochul. I am on the policy committee of NY Renews, the labor-community-environmental coalition that led the fight to pass NY's climate law in 2019.
markalban1@earthlink.net
Outstanding essay Max - exemplary socialist analyis: focus on the underlying systemic problem, and kicker at the end. BTW, unlike the stock exchange, commercial real estate can not move away.
An additional point - the individual and social value of time saved by not having to queue up and pay fares one by one is non-trivial. Curitiba Brazil pioneered another way to do that in a fare system: passengers pay to enter express bus mini-stations, with floor at same level as bus floor so accessible, where they wait protected from the weather. Bus doors open like subway doors and boarding is fast and easy. But the transition cost in money and time of converting to the Curitiba model makes eliminating fares clearly preferable.