Bridging allocative and productive efficiency in US transit policy research: A review

Abstract

In this paper, I review literature that can build foundation for integrating allocative and productive efficiency research of transit provision in the United States. Both frameworks concern transit performance but use distinct methods and talk past each other. Productive efficiency research uses economic cost models to measure the economic structure of transit service — economies of scale, economies of scope, etc. — to inform aggregate system size and output. This research shows that bus transit reaches constant scale economies between 300 and 500 vehicles but says little about when and where to allot these resources. Allocative efficiency research uses cost allocation models that disaggregate transit systems into parts — generally spatial areas or times of service — to measure service output and pricing variability. This literature suggests that transit agencies underprice or over-allocate resources to suburban areas and peak travel times. Yet, allocative efficiency scholarship ignores aggregate economic factors. This isolation in research approach and scale of focus leaves unclear the union between how much transit to produce, and when and where to produce it. Both bodies of literature can benefit from representation of transit modes other than bus transit and methodological integration. Allocative efficiency research can benefit from the use of more granular data and spatiotemporally focused studies.

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