On the interaction between public transport demand, service quality and fare for social welfare optimisation

Zhihua Jin, Jan-Dirk Schmöcker and Saeed Maadi

Research in Transportation Economics, 2019, vol. 76, issue C

Abstract: This paper analyses the interaction between fares and public transport service quality. With higher fares the operator has more resources to provide a better service, while demand in turn depends on both service quality and fare leading therefore to the question as to whether there is an optimal fare for different city scales. The model builds on the work of Daganzo (2010) who determines optimal network headway, stop spacing as well as the ratio of a central dense service area compared to the whole city size. In contrast to Daganzo we include fare and demand elasticity. With this it is possible to obtain some general insights for a range of cities on what type of fare levels are favorable. We focus on a flat fare structure, finding that from the viewpoint of maximizing social welfare, lower fares are preferable. If the operator cost coverage ratio is considered as objective function then there exists an optimal fare above the minimum fare. We illustrate the possible existence of critical fare points, at which the demand and service quality of public transport suddenly drop if an attractive alternative mode exists. We discuss further the impact of city size and demand density on optimal fares and service quality.

Keywords: Fare level; City characteristics; Public transportation network optimization (search for similar items in EconPapers)
JEL-codes: R41 R48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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DOI: 10.1016/j.retrec.2019.05.005

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