The book relates theoretical discussions in main stream transport economics to empirical evidence from the Norwegian passenger transport industry in order to give a better basis for transport authorities to optimize subsidized public passenger transport services. Chapters 1-4 provide general discussions of the industry and present relevant theory. Chapters 5-9 present quantitative analyses of different aspects of the passenger transport industry. Chapter 5 focuses on structural changes in the bus industry following the introduction of competitive tendering. Chapter 6 demonstrates how cost norms can be used as a tool to detect subsidy fraud. Using different methodological approaches, Chapters 7 and 8 estimate marginal costs in the Norwegian ferry industry which, in order to maximize social surplus, should form the basis for setting the fares in this strictly regulated industry. Finally, Chapter 9 operationalizes a general model describing the market for passenger transport and presents empirical evidence of fares and time costs for several transport modes.