Financial framework and development of the public transport sector in six Norwegian cities

This report analyses the financial framework for the public transport (PT) market in the six major cities of Norway during 1986-2002. The PT subsidies in these cities are among the lowest in Europe and have been steadily reduced for most of the cities during the period of study. A structural, econometric analysis including both supply and demand side suggests that earlier studies may have underestimated the price elasticities, mainly because the indirect financial effects of fare changes on PT supply. The long term effect of a subsidy reduction is found to be 50 per cent higher than the short term effect, due to these spillover effects.