Public Transit Bus Procurement: The Role of Energy Prices, Regulation and Federal Subsidies
45 Pages Posted: 12 Mar 2014 Last revised: 7 Feb 2015
Date Written: January 2015
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: Suggested Citation