Transit privatization

The privatization of transport refers to the process of shifting responsibility regarding the provision of public transport or service from the public to the private sector. While the subsidization of public transport is basically not contested, the important question in the public vs. private debate refers to the optimal level of subsidy. Opponents of privatization hold that transportation is a merit good. The rationale behind it is the idea that governments should guarantee basic service in public transport to deprived customer groups despite the fact that it is economically irrational.

The 1970s were an era of deregulation within the U.S., where railroads were deregulated in 1976 and airlines were deregulated in 1978. Different approaches to privatize railways in U.S. and Europe were taken. In Europe, rail operations were separated from rail infrastructure, while the U.S. railroad system is widely deregulated and vertically integrated. Another example were public owned bus companies in the U.K. Those companies were reorganized in 1985 into private companies (with the exception of London). Cost savings mainly resulted from reduced employment costs and increased productivity.

References

• International Transport Forum, (2008), Privatisation and Regulation of Urban Transit Systems, OECD Publishing.
• Clifford Winston, (2010), Last Exit: Privatization and Deregulation of the U.S. Transportation System, Brookings Institution.
• Black William R., (2003), Transportation: A Geographical Analysis, The Guilford Press.
• Cooper James, Mundy Ray, Nelson John, (2010), Taxi!: Urban Economies and the Social and Transport Impacts of the Taxicab, Ashgate Publishing Limited.
• Klein Daniel B., Moore Adrian T., Reja Binyam, (1997), Curb Rights: A Foundation for Free Enterprise in Urban Transit, Brookings Institution.

See also

• Rail deregulation in the U.S.
• Rail deregulation in the U.K.
• Bus deregulation in the U.K.
• Airline deregulation
• Railway nationalisation