Travel Costs and Intermodal Distribution in Urban Transportation

The free selection of travel between automobile and transit modes results in the individual equilibrium condition, which is not socially optimal. It is shown that shifting travel from cars to transit under most conditions results in travel improvements for both modes. To implement this winwin change, however, it is necessary to decrease the disutility (cost) of travel by transit and increase the disutility of automobile travel. A comparative analysis of travel costs by different modes shows that automobile users pay extremely low out-of-pocket costs, particularly when parking is subsidized (free). Indirect costs and impacts of automobile travel in urban areas are very high, but users do not pay them. This condition of underpriced automobile use results in excessive driving, which causes traffic congestion and has many negative impacts on cities. In many cities, transit improvements or incentives are paralleled by automobile incentives; this represents subsidization of competing services and thus fails to induce modal shift. A shift of travel from cars to transit (and other modes) can best be achieved by car disincentives complemented by transit improvements, so that travelers can change modes rather than reduce essential trips. The mobility of the low-income population can be enhanced when revenue from automobile disincentives is applied to improvements of alternative modes. Measures that reduce subsidies to automobile use and convert them into direct user costs, such as a significant increase in gasoline taxes and a reduction of tax exemptions for many car trips, are both effective and equitable.