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

transit Transit may refer to: Arts and entertainment Film * ''Transit'' (1979 film), a 1979 Israeli film * ''Transit'' (2005 film), a film produced by MTV and Staying-Alive about four people in countries in the world * ''Transit'' (2006 film), a 2006 ...

service (e.g., buses per hour) increases with demand, then a rise in demand shortens the waiting times of passengers at stops and stations. Because waiting time forms part of the costs of transportation, the Mohring effect implies

increasing returns In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris paribu ...

to scale for scheduled urban transport services. The effect was named for the

University of Minnesota The University of Minnesota, formally the University of Minnesota, Twin Cities, (UMN Twin Cities, the U of M, or Minnesota) is a public university, public Land-grant university, land-grant research university in the Minneapolis–Saint Paul, Tw ...

economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

Herbert Mohring Herbert Mohring (1928 – June 4, 2012) was a transportation economist who taught at the University of Minnesota from 1961–1994. He received his Ph.D. from Massachusetts Institute of Technology in 1959, with a thesis on the life insurance indus ...

, 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 incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it r ...

pricing when the Mohring effect is relevant.

William Vickrey William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics and Nobel Laureate. Vickrey was awarded the 1996 Nobel Memorial Prize in Economic Sciences with James Mirrlees for their research into the e ...

(1980). "Optimal transit subsidy policy," ''Transportation'', Vol. 9 No. 4, 389-409 The

average cost In economics, average cost 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 has strong implication to how firms will choose to price their commodities. Firms’ sale ...

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