Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2018:1: Optimal fares and frequencies for bus services in small cities

Disa Asplund and Roger Pyddoke
Additional contact information
Disa Asplund: CTS - Centre for Transport Studies Stockholm (KTH and VTI), Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Roger Pyddoke: CTS - Centre for Transport Studies Stockholm (KTH and VTI), Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: This paper evaluates the welfare effects of optimizing bus service fares and frequencies in small cities by modeling street congestion and crowding in public transport vehicles. The model is calibrated to the Swedish city of Uppsala. A simple demand model is used. Sensitivity analyses suggest that this is sufficient for representing important welfare effects, and that parameter uncertainty is more important than model uncertainty in this respect. The results indicate that there would be large, robust welfare gains from reducing public transport supply in Uppsala, especially in the outer zone of the city where reductions of supply would be large compared to the current situation. The welfare gains from adjusting fares would be smaller.

Keywords: Public transport; Bus; Demand model; Fares; Frequencies; Supply; Optimization; Urban; Welfare

JEL-codes: R10; R41; R48

47 pages, First version: February 19, 2018. Revised: April 8, 2019. Earlier revisions: February 19, 2018.

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