Market Urbanism, a NYbased blog that aims to bring free market thinking to urban (planning) issues wrote an excellent piece about positive transit externalities. The article is a response to the news that the New York MTA had to cut down on (proposed) bus lines and the strong downwards effect that has on housing prices nearby public transit lines. The MTA cannot internalize the externalities its infrastructure investment create and thus does not have incentives nor the ability to invest in those bus lines, given the severe budget restraints it faces.
The Market Urbanist, (in his day job he is active as a developer in NY and Chicago) continues with an interesting historical and geographical comparison and points out how in Asia- Hong Kong, Japan and Singapore- transit operators share in the value of their public transit network investments either as (co-) developer of the housing near the newly developed stations or through value capture or taxing of the upside they have created.
For the complete article and its comments see here.