Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies

45 Pages Posted: 12 Mar 2014 Last revised: 7 Feb 2015

See all articles by Shanjun Li

Shanjun Li

Cornell University - School of Applied Economics and Management

Matthew E. Kahn

University of Southern California; National Bureau of Economic Research (NBER)

Jerry Nickelsburg

University of California, Los Angeles (UCLA) - Anderson Forecast

Multiple version iconThere are 2 versions of this paper

Date Written: January 2015

Abstract

The U.S. public transit system represents a multi-billion dollar industry that provides essential transit services to millions of urban residents. We study the market for new transit buses that features a set of non-profit transit agencies purchasing buses primarily from a few domestic bus makers. In contrast with private passenger vehicles, the fuel economy of public buses has not improved during the last thirty years and is irresponsive to fuel price changes. To understand these findings, we build a model of bus fleet management decisions of public transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment highlights the role of energy prices, environmental regulations, and the “Buy America” mandate associated with receiving federal funding to purchase public transit buses.

Keywords: public transit buses, fuel economy, Buy America mandates, revealed preference

JEL Classification: D7, R4, Q4

Suggested Citation

Li, Shanjun and Kahn, Matthew E. and Nickelsburg, Jerry, Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies (January 2015). Available at SSRN: https://ssrn.com/abstract=2393806 or http://dx.doi.org/10.2139/ssrn.2393806

Shanjun Li

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

Matthew E. Kahn (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jerry Nickelsburg

University of California, Los Angeles (UCLA) - Anderson Forecast ( email )

110 Westwood Plaza, Suite C525
Los Angeles, CA 90095-1481
United States

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