Second Best Problems in Railway Infrastructure Pricing and Investment

Second Best Problems in Railway Infrastructure Pricing and Investment

This paper analyses optimal pricing of rail infrastructure use, and optimality conditions for rail and road investment. It is demonstrated that under most circumstances rail charges should be below marginal costs and that investments in both modes should be reduced.

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Optimal Public transport Price and Service Frequency

Because values of time and passenger behaviour depend on the level of frequency it is found that: (1) in urban public transport there may be one low-deficit local optimum and one high-deficit local optimum, one of which is global; (2) contrary to what might be expected, optimal financial deficit per passenger is typically larger for high frequency services than for low-frequency services; (3) the optimal off-peak may exceed the optimal peak price.

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