The Mohring effect is the observation that, if the frequency of a

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service (e.g., buses per hour) increases with demand, then a rise in demand shortens the waiting time of passengers at stops and stations. Because waiting time forms part of the costs of transportation, the Mohring effect implies increasing returns to scale for scheduled urban transport services. The effect was named for the

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Herbert Mohring, who identified this property in a 1972 paper.

Example

For example, suppose that passengers arrive randomly at a bus stop over the course of an hour, while the bus arrives once per hour. The average waiting time is 30 minutes. If the number of passengers per hour increases sufficiently to justify two buses per hour, then the average waiting time falls to 15 minutes. The presence of additional users lowers the cost of existing passengers. This anti-congestion effect is opposite to the usual road congestion effect, where an increase in the number of the users decreases the speed and the quality of service of the other users.

Transit subsidies

The Mohring effect is often referenced in support of transit subsidies, on the grounds that subsidy is required to achieve

marginal cost In economics, the marginal cost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it ...

pricing when the Mohring effect is relevant. William Vickrey (1980). "Optimal transit subsidy policy," ''Transportation'', Vol. 9 No. 4, 389-409 The

average cost In economics, average cost (AC) or unit cost is equal to total cost (TC) divided by the number of units of a good produced (the output Q): AC=\frac. Average cost is an important factor in determining how businesses will choose to price their pro ...

of a passenger-journey includes the average waiting time, while the marginal cost includes only the average waiting time less the diminution in total waiting time caused by the increase in frequency. Average cost thus exceeds marginal cost, and subsidy that bridges the gap is said to improve welfare.

Example

Transit subsidies

See also

References

Further reading