In developing countries, tight budget constraints imply a hard limit on the subsidies budget. The need for economic sustainability in these countries means cities should try to set fares for cost-recovery instead of a subsidized fare. Yet, setting fares at cost-recovery might price out of the most vulnerable parts of the demand for public urban transport. Therefore, given the limited resources and competing parts, there is a need to …show more content…
My study focuses on current users because they earn the benefits of the subsidy the fastest and thus are more likely to be immediately impacted by it. The metrics to evaluate the subsidy however are not clear since subsidies can be implemented for several different reasons. I discuss two ways in which the subsidy is improving conditions for current users. One, users are travelling more instead of spending less in their transport budget. Two, transit riders use those additional trips to travel to areas of the city with more job density than they could afford