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Subsidies for urban public transportation can be paid directly to transportation providers for supplying certain specified services or directly to transportation users in the form of discount transportation vouchers. These two subsidy mechanisms can be referred to as provider-side subsidies and user-side subsidies respectively. This paper discusses the likely advantages and disadvantages of three approaches urban communities can take to subsidizing public transportation: provider- side subsidies alone; user-side subsidies alone; and combined provider-side and user-side subsidies. Provider-side subsidies may be easier to administer than user-side subsidies, but they have often resulted in increased costs and in public dependence on a relatively small number of providers and services. User-side subsidies appear to offer more flexibility and efficiency; subsidized users can choose those providers and services that best meet their needs. The paper outlines a program of case studies and experiments designed to test hypotheses and fill major information gaps associated with these alternative subsidy approaches. /Author/
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