Index

First, a simple theoretical model is developed that determines optimal prices for private and urban transport services in both the peak and off-peak periods of the day, taking into account all relevant private and external costs. Second, the model is implemented to study pricing policies in Belgium, using recent estimates of private and social marginal costs. Several applications are then considered.

Exceptional changes in bus and underground rail fares in London in the early 1980s prompted analyses of the effects of fare levels and petrol prices upon the numbers of road casualties in London. Earlier estimates of the number of extra casualties associated with a period of unusually high fares in the early 1980s are shown to have probably been too high.

In public transport systems with self-service fare collection passengers can decide whether to pay the fare or not. A passenger who does not pay is subject to a risk of being fined. The paper provides some empirical support for the hypothesis that passengers behave as expected utility maximisers.

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.