This paper is the second issue in our program of Policy Studies UPDATES. In December 1989, we released Policy Studies No. 2, entitled "Public Transportation in Israel Today: Prospects for Reform." That essay by Moshe Glazman called for immediate attention to the problematic state of Israel's monopolistic, heavily subsidized (yet still expensive to the rider) system of public transportation. It recommended comprehensive reforms to bring about sound competitive public transportation that would both increase efficiency and provide passengers with a higher standard of service.

Shortly thereafter, a team of government ministers was commissioned to examine the structure of public transportation. Its report, submitted in March 1991, restated Glazman's procompetition recommendations.

Policy Studies UPDATE No. 2, released a year after the official government investigation, evaluates its report and offers some immediate steps to implement both the proposals in his original paper and in the government's official report. Glazman recommends the immediate implementation of competitive private bus services along existing major routes, special taxi or minibus services that offer flexible routes and fares (which has proven successful in numerous countries), the removal of price ceilings and subsidies each time a franchise for a specific bus line expires, and insuring that transport services be subject to rigorous, realistic cost-accounting to insure that every operating line and service becomes profitable. These steps would increase efficiency and reduce the need for subsidies.

Moshe Glazman is a Policy Analyst of the Institute for Advanced Strategic and Political Studies and a graduate of the Economics Department of Bar Ilan University, Ramat Gan.