01697801

Component

Improvements in transport supply are closely linked to urban agglomeration economies through their positive impact on the effective density of economic activity. Agglomeration benefits are therefore taken into account in the appraisal framework of large infrastructure projects in several countries. This research proposes that agglomeration externalities should be considered in short-run transport supply decisions as well. In particular, the authors investigate socially optimal pricing and frequency provision in an urban rail model featuring crowding and waiting time on the user cost side and density economies in operational costs. After deriving analytical optimality rules for frequency and fare setting, the model is calibrated with recent empirical measurements of agglomeration elasticities, crowding multipliers and operational cost elasticities. The authors' numerical experiment reveals that the agglomeration externality is similar in magnitude to the external cost of crowding under realistic conditions. In other words, if agglomeration benefits are taken into account, the socially optimal public transport fare, and the resulting cost recovery ratio, can be closer to zero compared to what earlier studies derived. The paper contributes to the literature with the first optimisation model of public transport provision with agglomeration economies.

This paper was sponsored by TRB committee ABE20 Standing Committee on Transportation Economics.

19-01294

English

18p

2019

Transportation Research Board 98th Annual Meeting

Digital/other

Figures; References; Tables

Costs; Externalities; Fares; Public transit; Urban areas

Agglomeration economies

Economics; Passenger Transportation; Public Transportation

Transportation Research Board Annual Meeting 2019 Paper #19-01294

TRIS, TRB, ATRI

Dec 7 2018 9:37AM