PVTA Buses: To Run or Not to Run, That Is The Question!

PVTA Buses: To Run or Not to Run, That Is The Question!

by Linda, Rudmila, Alina, Taniko

Who stayed on campus during Thanksgiving break?  Not a lot of people.  Many students were able to leave campus to celebrate the holiday.  Thus, there was a huge decrease in the number of students who stayed on campus.  There were, however, students who stayed on campus to catch up on school work, complete internship application, study abroad paperwork, and even visit friends in the neighboring five colleges, such as Smith, Amherst, Hampshire, and UMass Amherst.  However, for the students who stayed on campus, how could they visit their friends at the neighboring colleges if the Pioneer Valley Transit Authority (PVTA) buses were not running?

PVTA buses run throughout the five colleges as well as the pioneer valley.  Students at the five colleges can ride on it without paying for it themselves.  PVTA buses are a public good.  They have a positive externality for college students, but have a negative externality (air pollution) for the environment.  They are non-excludable and non-rival.  For example, it is not possible to prevent anyone who has not paid, from having access to it.  Anyone who wants to ride the bus, can.  Also, just because Linda is getting onto the bus does not mean that Taniko can’t.

When thinking of running the PVTA buses, one needs to analyze the cost of doing so.  For example, the fix cost (FC) is the bus itself and the lot to house the buses when they are not running.  The variable costs (VC) are gas, employees, maintenance costs, cost of insurance, etc.  Every semester, there is a range of possible variable costs that the five colleges (Mt. Holyoke, Smith, Hampshire, Amherst, and UMass Amherst) contribute to, in return for offering the public good on campuses.  All five colleges must pay for the PVTA buses, but UMass Amherst runs it.

Depending on which time of year it is, the PVTA runs on different schedules. For instance, during J-Term and summer, the PVTA buses run less frequently, on a minimized schedule and it may only run every half an hour or every hour in order to minimize cost due to fewer students and less demand on campuses.  During spring, fall, Thanksgiving, and December break, when the PVTA buses do not run at all, there is an opportunity for extra revenue by PVTA from the few students who decide to stay on campus.

With this new opportunity for revenue, the PVTA needs to analyze the cost of providing such good during those breaks.  Before PVTA can make this decision, they need to be sure that the revenue generated from this period will be greater than the cost to run it during this period.