Journal of Korean Society of Transportation (대한교통학회지)
- Volume 8 Issue 1
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- Pages.17-24
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- 1990
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- 1229-1366(pISSN)
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- 2234-4217(eISSN)
Optimal Pricing Rules for Public Transport
최적의 대중교통요금 결정원리
Abstract
The first-best pricing rule which achieves economic efficiency is to equate price with marginal cost. Since public transport demand is derived from some other demand, the user cost as well as the producer cost are considered in its pricing. The optimal price is derived from a derivative of the total social cost with respect to demand. In case of the bus, if there is enough capacity for demand increase, the optimal price is determined by the marginal producer cost resulting from bus sped decrease and by the marginal user cost resulting from journey time increase. Both are caused by boarding and fare collecting time of an additional passenger. Because of the budget constraints, the marginal cost pricing cannot be applied in practice. Then price discrimination as the second-best pricing is introduced. The Ramsey pricing, to charge different prices for different demand elasticities, and nonuniform prices such as travelcards can be applied. However, there is practical difficulty in implementing these prices because of great informational requirements, the costs of administration and the ease to users.
Keywords