 Fare evasion in public transport: How does it affect the optimal design and pricing?Raúl Ramos and Hugo E. Silva Transportation Research Part B: Methodological, 2023, vol. 176, issue C Abstract: Fare evasion produces significant revenue losses in public transport systems. Recent research has found that low service quality and high prices are important determinants of fare evasion. However, the economic literature that studies the optimal public transport provision has overlooked the phenomenon. We develop a demand model of horizontal differentiation to investigate how fare evasion affects the design and pricing of public transport that maximizes utilitarian social welfare. We show analytically that fare evasion can create incentives to reduce public transport prices and improve service quality, putting upward pressure on its subsidization. We perform numerical simulations and sensitivity analysis to quantify the impact of these incentives on the public transport provision. These simulations confirm that the incentive to reduce fare evasion can lead to an optimal design and price that requires subsidies. Keywords: Public transport; Fare evasion; Fare dodging; Pricing; Design; Subsidy; Inspection; Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:transb:v:176:y:2023:i:c:s0191261523001285 Ordering information: This journal article can be ordered from DOI: 10.1016/j.trb.2023.102803 Access Statistics for this article Transportation Research Part B: Methodological is currently edited by Fred Mannering More articles in Transportation Research Part B: Methodological from Elsevier |
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