Ask: NUS Economists

Determining the optimal subsidy for public transport

A Public transport subsidies, though commonplace around the world, vary in magnitude. Subsidies are low in some cities and very high in other cities. In Sao Paolo, Brazil, subsidies cover only about 5 per cent of operation costs, while in Washington DC and Los Angeles, they run as high as 80 per cent of operation costs.

Singapore, too, subsidises public transport. Historically, instead of subsidising commuters directly through fares, the Government covered particular costs. For example, it provided funds through the bus service enhancement programme to increase the number of buses in operation.

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A version of this article appeared in the print edition of The Straits Times on July 20, 2018, with the headline 'Determining the optimal subsidy for public transport'. Print Edition | Subscribe