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

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  • Jin, Zhihua
  • Schmöcker, Jan-Dirk
  • Maadi, Saeed

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.

Suggested Citation

  • Jin, Zhihua & Schmöcker, Jan-Dirk & Maadi, Saeed, 2019. "On the interaction between public transport demand, service quality and fare for social welfare optimisation," Research in Transportation Economics, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:retrec:v:76:y:2019:i:c:s0739885918301604
    DOI: 10.1016/j.retrec.2019.05.005
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    References listed on IDEAS

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    Cited by:

    1. Simic, Vladimir & Gokasar, Ilgin & Deveci, Muhammet & Karakurt, Ahmet, 2022. "An integrated CRITIC and MABAC based type-2 neutrosophic model for public transportation pricing system selection," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    2. Varghese, Varun & Moniruzzaman, Md. & Chikaraishi, Makoto, 2023. "Environmental sustainability or equity in welfare? Analysing passenger flows of a mass rapid transit system with heterogeneous demand," Research in Transportation Economics, Elsevier, vol. 97(C).
    3. Saeed Maadi & Jan-Dirk Schmöcker, 2020. "Route choice effects of changes from a zonal to a distance-based fare structure in a regional public transport network," Public Transport, Springer, vol. 12(3), pages 535-555, October.

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    More about this item

    Keywords

    Fare level; City characteristics; Public transportation network optimization;
    All these keywords.

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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