This paper tests the elasticities to time, frequency and interchange implied by an approach which combines these three variables into a single term and compares this approach with models which estimate separate elasticities. The forecasts obtained from different model forms can be appreciably different.
The paper examines the impact of deregulation on service co-ordination in the British conurbations outside London. Co-ordination decreased significantly in respect of timetables, fares and passenger information in particular in the period immediately following deregulation. Since then some aspects of co-ordination have improved. On balance, the author’s judgement is that there has been a net decrease in consumer welfare.
Lower prices encourage firms to economise by increasing load factors; on the other hand, lower prices require higher service frequency to accommodate the additional passengers. Thus inverse price/quality tradeoffs are possible in public transport, and did occur when the US airline industry was deregulated.
