The Relationship between Fare Elasticity and Trip Length : Some Comments.

Abstract

The paper first reviews a model previously developed by the authors which examines how a public transport operator who is concerned about both profit and consumer surplus will design a uniform fare scheme and the relationship between fare and travel distance within such a scheme. Using the results of this model as a starting point, this paper focuses on how the fare’s proportion of travellers’ generalised costs and fare elasticity are linked to travel distance. It is shown that how these figures relate to trip length is critically dependent on the weight the transport operator puts on profit and the assumptions made about the demand conditions. Some of the model’s results are discussed in the light of Norwegian data for bus and ferry transport.