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Travel distance and optimal transport policy

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  • Jørgensen, Finn
  • Pedersen, Pål Andreas

Abstract

A theoretical model is adopted in order to discuss optimal fare and optimal quality of supply schemes for a transport operator. The analysis shows how fare and quality of supply are related to travel distance and to the transport operator's emphasis on profit versus consumer surplus. Under reasonable assumptions imposed on the actual functions we find that the more weight the operator attaches to profit, the higher the fare level and the higher the generalised travel costs. How the operator's objectives influence the quality of transport and perhaps more surprisingly how travelling distance influences fares, quality of transport and generalised travel costs, are ambiguous with relation to the starting restrictions placed on the actual functions. The paper then discusses the special case in which the quality of transport is exogenous to the transport operator. One important result is that higher demands set to the transport operator regarding the quality of the transport supply do not necessarily reduce the transport users' generalised travel costs. Some of the model's results are commented in the light of empirical studies from Norway.

Suggested Citation

  • Jørgensen, Finn & Pedersen, Pål Andreas, 2004. "Travel distance and optimal transport policy," Transportation Research Part B: Methodological, Elsevier, vol. 38(5), pages 415-430, June.
    • Handle: RePEc:eee:transb:v:38:y:2004:i:5:p:415-430
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    References listed on IDEAS

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    2. Pedersen, Pål Andreas, 2003. "On the optimal fare policies in urban transportation," Transportation Research Part B: Methodological, Elsevier, vol. 37(5), pages 423-435, June.
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    Cited by:

    1. Huang, Di & Liu, Zhiyuan & Liu, Pan & Chen, Jun, 2016. "Optimal transit fare and service frequency of a nonlinear origin-destination based fare structure," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 96(C), pages 1-19.
    2. Guo, Qianwen & Sun, Yanshuo & Schonfeld, Paul & Li, Zhongfei, 2021. "Time-dependent transit fare optimization with elastic and spatially distributed demand," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 353-378.
    3. Jørgensen, Finn & Santos, Georgina, 2014. "Charges on transport – To what extent are they passed on to users?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 183-195.
    4. Zhang, Junlin & Lindsey, Robin & Yang, Hai, 2018. "Public transit service frequency and fares with heterogeneous users under monopoly and alternative regulatory policies," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 190-208.
    5. Clark, Derek J. & Jørgensen, Finn & Mathisen, Terje Andreas, 2011. "Relationships between fares, trip length and market competition," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(7), pages 611-624, August.

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