Simultaneous optimization of network and fares for self-financing public transportation system

The public transportation system in densely populated areas is often managed as a self-financing system due to fare passenger revenues. In a self-financing system, the network structure and the monetary fare mutually interact; therefore, it is efficient to design both simultaneously. We developed an optimization model that endogenously determines the bus network and fares to maximize the total social surplus of the region. In this study, we conducted numerical applications of the model to a public transportation system around a railroad station in a metropolitan suburb area. The results showed that the optimal network topology changes with the scale of demand, and network shape significantly alters the optimal fare structure. Three types of virtual regions were examined to illustrate optimal fares.