Private Market Participation in Urban Mass Transportation: Application of Computable Equilibrium Models of Network Competition

Urban mass transportation is a major recipient of local, state and federal capital and operating subsidies. In this era of increasing pressure to reduce budget deficits at all levels of government comes the call to return part of the urban mass transit industry to the private sector. This paper presents the theory and application of a computable equilibrium model of urban mass transportation which is designed to address the issues of sustainability and distributional equity in this market. This model also serves as an illustration of how computable equilibrium models can be employed in the analysis of network-based competition. A series of examples from the Philadelphia region are presented to illustrate the model's potential as a policy analysis tool and to shed some light on the efficiency versus distributional equity debate which is currently underway in the transportation/public policy community.