Final answer:
Urban areas subsidize mass transit systems to improve transportation efficiency, reduce congestion, and lower urban pollution levels. Such subsidies enable economies of scale and support socio-economic benefits, including development and cost savings for the community.
Step-by-step explanation:
Building a mass transit system can improve the living quality of urban areas by reducing traffic congestion, lowering pollution levels, and providing an efficient means of transportation. Urban areas are willing to subsidize urban transit systems because they can lead to significant economies of scale, especially in the case of rail systems. These subsidies are justified by the benefits urban transit systems provide, which can include fostered New Urbanism development and reduced transportation expenses for citizens, as seen in the example where providing free access to students promotes public transportation use, benefiting the community at large.
Mass transit systems also typically experience economies of scale, making them more cost-effective as more people use them. For instance, the operational costs per rider tend to decrease with the increasing number of riders, as indicated by transit system data. Subsidies make sense because they support these systems to reach the point where they can realize these economies of scale.
There is also a strong argument for subsidies based on social and economic benefits. For example, in San Diego's Little Italy District, efficient public transit has stimulated redevelopment, showcasing how subsidies can be an investment in the economic development and livability of the community.