Curb Rights: A Foundation for Free Enterprise in Urban Transit.
Gordon, Peter
Over the last 25 years, a near-consensus has been achieved by those
U.S. urban transportation researchers disposed to economic analysis (not
all of whom are necessarily economists). It is widely agreed that (i)
high-capacity rail transit systems are inappropriate to modem American
cities, where they cannot compete with private autos (yet, new rail
systems keep being added, grand monuments to successful rent seeking);
(ii) conventional bus transit systems, subsidized and usually run by
legalized transit monopolies, are also falling behind; and (iii) most
roads, highways, and workplace parking spaces are used inefficiently
because they are not priced. Not surprisingly, the policy prescriptions
that follow have been mostly ignored. Roughly speaking, they are (i)
stop building expensive rail transit systems; (ii) deregulate and
privatize the transit (and taxi) monopolies; and (iii) charge the
opportunity costs of roads, parking spaces, and airshed, including
time-of-day road pricing and emissions taxes. Most of the recent
literature simply adds further empirical (and occasionally theoretical)
embellishments to these views. Daniel B. Klein, Adrian T. Moore, and
Binyam Reja (KMR) are different. They add a new and original twist to
the argument, namely transit deregulation and privatization cannot be
expected to succeed unless property rights at curbside (hence the
book's title) are firmly established.
The authors begin with a review of the near-consensus. The universal
appeal of private autos makes perfect sense in dispersed and rapidly
decentralizing cities (just 5.12% of work trips were via public transit
in 1990). Indeed, widespread automobile use contributes to further
suburbanization. There really is no telling how far the process will go.
Some say that, in the information age, geography is irrelevant. Others
(including many city planners and new urbanists) recommend more compact
development. Doomsday traffic forecasts have routinely been invoked to
make the case for huge public investments in transit. Yet, in 1990, the
U.S. census reported that average commuting speeds had gone up over the
previous 10 years. Pisarski (1996) used the same data to show that just
12.53% of U.S. commuters traveled 45 minutes or more (one way); the
national average trip duration was 22.38 minutes. These data probably
understate the good news because they do not control for the increase in
multistop, multipurpose trips.
If there is any future for transit, it has to approximate many of the
advantages of private autos: It has to be flexible enough to connect
origins and destinations that are increasingly ubiquitous. It also has
to be managed by entrepreneurs rather than by politicians. Can we really
invent alternative modes that are a good enough substitute for enough
people to make a market? KMR suggest how we can do it. Transit
privatization along with curb rights are necessary conditions. Whereas
the former is an old idea, the latter has not been fully developed.
The authors find support for their idea from studying the U.S. jitney experience of 1914-1916, the mixed record of recent transit deregulation
(here and abroad), and also jitney operations in various Third World
cities. Are there instabilities when jitney operators practice
interloping vis-a-vis pre-existing scheduled transit service? Will bus
deregulation fail when curb rights remain unclear?
Interloping did occur in the U.S. when early autos became available
and entrepreneurs did what comes naturally - they saw a market for
jitney services and scrambled to supply them. "Jitneys no doubt
skimmed some of the cream of the streetcar business yet they also served
more passengers than were lost from streetcars and filled important
market niches. They were used mainly for short-distance trips and
provided transportation to people who would otherwise not have been
served by the streetcar companies. Although they charged no more than
the streetcars, their gross revenue far exceeded the streetcars'
loss of revenue" (p. 35). Unable to compete, the streetcar
companies managed to have most of the upstarts regulated out of
existence. The authors emphasize that this was a brief and rare
"change and discovery" episode in the annals of U.S. public
transit history. It also highlighted the interloping problem. Moreover,
conventional transit's current woes could have been foretold;
today, "virtually everyone can afford to be his own jitney
driver" (p. 36).
Another lesson can be learned by studying the developing countries,
where regulation is often so widespread that underground industries
proliferate. The common problems that occur at curbside (especially at
public transit stops) are recognized and avoided via route associations
that have emerged in various places. They become the governing units,
making "rules against interloping and deviating from
schedules" (p. 38). Not surprisingly, the associations become
cartels, fixing fares and limiting market entry. Intimidation and
strong-arm enforcement tactics are not uncommon. Nevertheless, the
importance of curb rights is illustrated by the developing country
experience. Likewise, "The central failing of British bus
deregulation is the difficulty that bus companies have had in
appropriating their investment in waiting passengers" (p. 72).
There are illegal jitneys currently operating in some U.S. cities,
usually in poor neighborhoods, dramatizing the service shortfalls of the
public transit monopolies. Moreover, KMR report that legal taxis provide
more service than conventional transit. The "gypsies" persist
wherever they are widespread enough to cause the regulators to eschew
enforcement, sometimes even acquiescing to limited legalization.
Legalized jitneys operate most widely in Atlanta.
Could U.S. cities manage interloping without creating a new group of
cartels? The flipside of the interloping problem is conventional bus
companies' inability to appropriate their investment in setting up
and tending a route, mainly the times and places that waiting passengers
congregate. Jitneys certainly benefit from existing bus routes but, by
doing their job, threaten to destroy them (the dissolving anchor). This
is what the authors label the "thin market" case; in the
"thick market" case, there is enough demand for the jitneys to
survive without the cultivated bus route. If there had been a bus route
in the thick market and it is dissolved, that is not a problem for
consumers because there are enough cascading jitneys. Further complexity
is added by considerations of the level of conventional bus subsidies
and the trade-offs that consumers make between low fares and faster
jitney service.
In light of KMR's analysis, a property rights framework that
encourages jitneys but also gives some exclusivity to the bus anchor is
called for. This is where it gets tricky. The authors'
recommendations are admittedly speculative. They suggest various
patterns of alternating curb commons and exclusive but stop zones.
Demarcations vary by time-of-day and peak versus off-peak passenger
demand. Big-city airports may have developed some useful experience in
this area.
There are also discussions of the usual rights transferability and
enforcement issues. There is certainly room for more research. KMR get
the credit for posing research questions not usually considered in the
urban transportation field. Property rights auctions in newly
deregulated industries and in the transition economies have, likewise,
spawned new areas of research.
In light of a near-consensus plus the interesting research presented
in the volume under review, what is the likelihood of an enlightened
transit policy in the U.S.? Will rent-seeking be superseded? In Los
Angeles county, 10% of eligible voters turned out to narrowly pass a
transit-dedicated sales tax hike measure that appeared on their 1980
ballots. At voting rates like this, interest groups easily win. In
addition, Hopkins (1996) has shown that, although there has been
considerable deregulation of key sectors of the U.S. economy, the gains
have been nullified by expanded environmental regulation. Many people
are prepared to ignore costs when it comes to the environment. Transit
providers (a large group in the case of pricey rail) and their unions
have benefited, promoting the erroneous notion that more conventional
transit capacity means less pollution (correlation between annual
transit use and annual transit subsidies is negative [Cox 1997]) and
making common cause with clean air advocates. As happens so often,
economic common sense cannot match the constituencies energized by
expensive public works projects.
References
Cox, Wendell. 1997. The public purpose urban transportation fact
book. http://www.publicpurpose.com/.
Hopkins, Thomas. 1996. Regulatory costs in profile. Center for the
Study of American Business, Washington University, St. Louis, Policy
Study No. 132.
Pisarski, Alan E. 1996. Commuting in America II. Landsdowne, VA: Eno
Transportation Foundation.
Peter Gordon University of Southern California