2024 Volume 80 Issue 9 Article ID: 23-00238
In rural areas, many public transportation services are secured through public subsidies. However, since 2019, there has been considerable criticism from various institutions and commentators that these subsidies merely cover deficits, thereby reducing incentives for operational improvements. This study focuses on Japan's regional public transportation subsidy system, identifying methods such as "deficit compensation subsidy" and "tendering of services (gross cost contracts, net cost contracts)" from academic theory and administrative practice. It highlights that recent criticisms of "deficit coverage" do not explicitly consider the tendering of services, leading to a failure to distinguish between deficit compensation subsidies and gross cost contracts and consequently underestimating the value of gross cost contracts. Based on this analysis, the study conducts a policy evaluation, demonstrating that after deregulation, the significance of deficit compensation subsidies has diminished, the national subsidy system's improvement has been delayed, and the transition to a tendering of services system is urgently needed.
