Optimal Fares for Public Transport

13 years 9 months ago

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The fare planning problem for public transport is to design a system of fares that maximize the revenue. We introduce a nonlinear optimization model to approach this problem. It is based on a discrete choice logit model that expresses demand as a function of the fares. We illustrate our approach by computing and comparing two diﬀerent fare systems for the intercity network of the Netherlands. 1 The Fare Planning Problem The inﬂuence of fares on passenger behavior and revenues is traditionally studied from a macroscopic point of view. Classical topics are the analytic study of equilibria [7], price elasticities [3], and the prediction of passenger behavior [1]. The only approaches to fare optimization on a more detailed level that we are aware of are the work of Hamacher and Schöbel [5] on the optimal design of fare zones and the work of Kocur and Hendrikson [6] and De Borger et al. [4] who introduced a model for maximizing the revenue and the social welfare, respectively. In cont...

Ralf Borndörfer, Marika Neumann, Marc E. Pfet

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