Indeed. "No price signal[1]" is very different from "no cost". It will cost plenty. Any service priced at zero simply has no back-pressure mechanism to respond to demand, nor to forecast demand, nor to measure demand in relation to alternative transportation options.
All of those problems already apply to any government program. The answer is to calculate demand and allocate supply based on factors such as ridership. That will be less efficient in a sense than pricing, but not necessarily so, because pricing in a market with network effects and significant fixed costs can also create significant inefficiency. Pricing, especially pricing that exceeds the variable cost or has to include the cost of a fare collection infrastructure, can reduce usage and thereby reduce the network effect. Which is a feedback loop that can lead to a death spiral. That's hardly efficient either.
And ridership is effectively a price signal anyway, because even when there is no monetary cost there is still an opportunity cost.
AnthonyMouse|6 years ago
And ridership is effectively a price signal anyway, because even when there is no monetary cost there is still an opportunity cost.