A strategy for increased public transport usage – The effects of implementing a welfare maximizing policy

For a long time public transport has experienced a struggle against rising costs and increasing car ownership. So far, public transport appears to be on the losing side in terms of market shares. The aim if this paper is to investigate if a different policy could result in higher public transport usage and improved social welfare. In order to achieve this, a model, explaining public transport usage, public transport supply and costs, is estimated. The model is then used in order to simulate the outcome of an alternative policy of social welfare maximization. It is found that the current policy of the Swedish transport is not efficient in terms of maximizing welfare. In 2011, public transport fares should have been lower in 20 of 21 counties and the supply of vehicle kilometres should have been higher in 17 of 21 counties. Implementing a welfare maximizing policy would have increased the number of trips per capita by 17.2% in 2011 and by an average of 6.7% for the period 1986–2011.