Looking East: A comparative study of the subway systems in Hong Kong and New York City

Abstract

The public transit authorities that operate subway systems in America are under increasing financial strain, especially after the recession in 2008. This paper examines whether privatization of American subway systems would allow them to function without government subsidies. It does so through a case study comparing the MTA, the public authority that operates the New York City subway system, and MTRC, the privatized corporation that operates the profitable system in Hong Kong. After analyzing to what degree MTRC’s fiscal advantages can be attributed to its privatization, it finds that privatization, while beneficial to cutting costs and raising revenues, would fall short of closing the MTA’s budget gap, potentially because the size of the system is financially unviable. As a result of this conclusion, the government should consider other policy options, such as value capture techniques, to help alleviate financial pressure on these systems.