CONTRACTING OUT AND COST ECONOMIES FOR A PUBLIC TRANSIT FIRM

This article provides evidence that as a consequence of a public transit firm contracting out a paratransit service to a private provider, the firm may be able to provide the same level of mass transit service but at a lower cost. The public transit firm considered herein is the Tidewater Transportation District Commission (TTDC), a public agency chartered in the Commonwealth of Virginia to plan, operate and regulate public transport services in a five-city area. The author concludes that contrary to the view generally held by the transit industry, a public transit firm can lower the cost of its mass transit service without having to reduce the level of this service and/or without having to contract out this service to a lower-cost private provider.