Optimal Fares for Public Transport

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...

• Type: Conference
• Year: 2005
• Where: OR
• Authors: Ralf Borndörfer, Marika Neumann, Marc E. Pfetsch
• Keywords: Fare, Fare Planning Problem, Model, OR 2005