Description:

Northwestern University Transportation Center presents...

“The role of space in design, scale economies and optimal pricing in public transport”

Sergio Jara-Diaz
University of Chile

ABSTRACT:

We examine the spatial sources of scale economies in public transport and their impact on optimal pricing, by looking at the variation of design when minimizing users' plus operators' costs as patronage increases. The point of departure is the classical analysis of scale economies induced by the optimal frequency adjustment (the so-called Mohring effect), and the diseconomies provoked by the increasing effect of patronage on boarding and alighting time (Jansson, 1984). Then we introduce lines spacing by generalizing Chang and Schonfeld's (1991) model, showing that it generates a new source of scale economies as density increases with patronage, diminishing access and egress times while keeping the properties of the basic one-line model. From this we move into the general area of optimal transit networks, where we show that increasing patronage induces a series of changes in the optimal design of transit lines: essentially the reduction of transfers, distances travelled and number of stops, elements that emerge in favor of scale economies which we summarize under the concept of "directness" in route structures. We conclude that spatial effects are indeed a source of scale economies as patronage increases; further analysis including changes in technology and congestion is needed.