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Welfare Effects of Price Integration in Local Public Transport

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  • Alberto Cassone
  • Carla Marchese

Abstract

**: In metropolitan areas collective transport is often supplied by many firms and in many modes. The paper focusses on the merging of decisions about prices in two market regimes: monopoly and benevolent regulation through Ramsey pricing. The results confirm that centralization entails efficiency gains under monopoly whenever a unique supplier substitutes many firms serving each link of a network. Under benevolent regulation, instead, centralization entails efficiency gains only under certain conditions. Moreover, efficiency improvements under Ramsey pricing involve the introduction of cross subsidies among previous regulatory jurisdictions. Hence some users gain while others lose. Both the theoretical and empirical literature suggest that periphery residents are the main beneficiaries of centralization.

Suggested Citation

  • Alberto Cassone & Carla Marchese, 2005. "Welfare Effects of Price Integration in Local Public Transport," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(2), pages 257-274, June.
    • Handle: RePEc:bla:annpce:v:76:y:2005:i:2:p:257-274
    DOI: 10.1111/j.1370-4788.2005.00278.x
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    1. Abrate, Graziano & Piacenza, Massimiliano & Vannoni, Davide, 2009. "The impact of Integrated Tariff Systems on public transport demand: Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 120-127, March.
    2. Takahashi, Takaaki, 2017. "Economic analysis of tariff integration in public transport," Research in Transportation Economics, Elsevier, vol. 66(C), pages 26-35.

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