Original post date: October 18, 2013
Article by: Ben Douglas

5/16/2023 Edits: Some links that were no longer working have been fixed.

In 2007, Chile’s center-left ruling government coalition eliminated most private provision of transit, citing the need to eliminate profit and reduce the diversity of services offered to the traveling public in the capital city of Santiago. Additional concerns included the pollution, accidents, and traffic congestion caused by the three thousand bus companies that serviced the city. At the same time, however, these companies were doing something remarkable: privately providing timely and reliable public transit in a dense, metropolitan city.

This is the situation described to us by Duke economist Michael Munger in his work on Santiago’s transit woes prior to the institution of a World Bank-funded Bus Rapid Transit (BRT) system, which shall be addressed shortly. The reasons for pollution are fairly straightforward. Santiago occupies a basin between two mountain ranges that, due to the inversion effect, leaves a hue of smog covering the city; this problem was not helped by the sheer quantity of internal combustion engines within this confined area. Moreover, buses were old and dirty due to lack of licensure, enforcement of tort law, or other formal or informal institutions that promote compliance with emission standards.

The accident problem stemmed from the structure of incentives. “Drivers were paid based on the number of passengers, rather than on time or distance driven,” Munger explains. “But a moment’s thought reveals the problem: Take one bus stop with a crowd of passengers, and then add two buses with a lot of empty seats. The result is a 40-mile-per-hour bus race on streets full of cars and pedestrians. The drivers were taking tickets, making change, watching traffic, and reenacting the chariot race scene from the movie Ben-Hur all at the same time.” The result of all this commotion was a nearly 50% increase in the number of motor vehicle accidents between 1990 and 2005 and an average of 700 pedestrians killed by car or bus annually. Both of these rates rose during this fifteen year period in Santiago despite having declined in many other Latin American cities.

Following precedents set by numerous other Latin American nations, the Chilean government responded to these problems by establishing Transantiago—Santiago’s very own BRT. Operation commenced on February 10, 2007. The new fleet, comprised of 1,200 new low-floor articulated trunk buses, 1,500 conventional trunk buses and 2,300 feeder buses, completely replaced the innumerable private buses that had previously serviced the city. In contrast to Lima, the subject of my previous blog , Santiago’s BRT system is publicly owned and operated. The regulations imposed by Lima’s municipal authorities are exchanged for a ban on private buses, with the exception of ten companies licensed by the city and granted a monopoly on certain routes. In my next blog, I will discuss the implementation and results of these policy changes.

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