Optimal Bus Transport Financing – A Cost-Benefit Analysis of Zero Fares Policies in Urban Bus Transport

In order to design an optimal fare structure, the time costs for the bus driver and passengers on the bus of collecting fares on buses is important to study. The first objective of this paper is to empirically study how much a zero fares policy in off-peak, and both in peak and off-peak hours would bring down the fares collection costs in the medium sized town of Linkoping. A second objective of the paper is to make a cost-benefit analysis (CBA) of these two zero fare alternatives. A zero off-peak fare is in line with marginal cost pricing and an all day zero fare could be motivated by reduced fare collection costs and reduced negative externalities due to mode change from car to bus in urban areas. The financial consequences will, of course, be calculated as well. The increased deficit could be covered by an earmarked tax on the inhabitants of Linkoping. Their willingness to pay such an earmarked tax, that would make bus travel free of charge, and in addition reduce the travel time by bus thanks to no need for fare collection, is investigated in a pilot Stated Preference (SP) study that will supplement the CBA.


  • English

Media Info

  • Media Type: Print
  • Edition: First Edition
  • Features: Appendices; Figures; References; Tables;
  • Pagination: pp 393-419
  • Monograph Title: Competition and Ownership in Land Transport Passenger Transport

Subject/Index Terms

Filing Info

  • Accession Number: 01051398
  • Record Type: Publication
  • ISBN: 9780080450957
  • Files: TRIS
  • Created Date: Jun 8 2007 1:00PM