Working Paper: NBER ID: w19964
Authors: Shanjun Li; Matthew E. Kahn; Jerry Nickelsburg
Abstract: 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. Unlike private vehicles, the fuel economy of public buses is irresponsive to fuel price changes. To understand this finding, we build a model of bus fleet management decisions of local transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment suggests that transit agencies: (1) do not respond to energy prices in either their scrappage or purchase decisions; (2) respond to environmental regulations by scrapping diesel buses earlier and switch to natural gas buses; (3) prefer purchasing buses from manufacturers whose assembly plants are located in the same state; (4) exhibit significant brand loyalty or lock-in effects; (5) favor domestically produced buses when they have access to more federal funding.
Keywords: Public Transit; Bus Procurement; Energy Prices; Federal Subsidies; Environmental Regulations
JEL Codes: R41; R48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Energy prices (Q41) | Scrappage decisions (L99) |
| Energy prices (Q41) | Purchase decisions (D12) |
| Environmental regulations (Q52) | Scrappage decisions (L99) |
| Environmental regulations (Q52) | Purchase decisions (D12) |
| Federal funding (I22) | Scrappage decisions (L99) |
| Federal funding (I22) | Purchase decisions (D12) |
| Brand loyalty (M37) | Purchase decisions (D12) |
| Local favoritism (H73) | Purchase decisions (D12) |