Price differentiation and fare integration in urban public transport.

Author(s)
Hodson, P.
Year
Abstract

The optimal pricing of local public transport is much debated. Debate concerns both the level and the structure of prices. This paper focuses on price structure. Decisions about price structure might have different objectives: for example to maximise profit; to maximise ridership within a budget constraint; or to maximise some measure of social welfare. Whatever the objective, there is in academic and professional circles little consensus on the price structure which is optimal. Two kinds of price reform are commonly discussed: price discrimination, capitalising on the differing willingness to pay of different users (often advocated by economists); and tariff integration, offering users a seamless service and removing penalties for transfer between services or operators (often advocated by transport professionals). To complement the theory-led character of these debates, this paper will contribute empirical evidence. Empirical data that permits detailed cross-city comparison of public transport price structures is scarce. This paper draws on a new database of public transport supply and demand that will cover about 150 major European cities. This data permits the construction of indicators of price discrimination between: short and long trips; peak and off-peak travel; trips to the city centre and others; prices for regular and occasional travellers; prices for working-age passengers, young people and elderly people; and of tariff integration between: urban services provided by a single operator ('internal integration'); urban services provided by different operators ('urban integration'); urban and regional services ('regional integration'). Exploratory work with data from 45 cities suggests that the following relationships may hold: prices may vary more with distance, and off peak discounts may be commoner, where operators have a role in fixing prices; if authorities fix prices, integration may be higher under competition; if operators fix prices, integration may be lower under competition; systems with a lower level of internal integration may tend to offer higher discounts for working-age passengers who are regular travellers. For the covering abstract please see ITRD E135207.

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Publication

Library number
C 43030 (In: C 42993 CD-ROM) /10 /72 / ITRD E135244
Source

In: Proceedings of the European Transport Conference ETC, Strasbourg, France, 18-20 September 2005, Transport Policy and Operations - Local Public Transport - Fares Policy and Customer Loyalty. 2005. 24 p., 16 ref.

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