Bus Fares Pricing

Abstract

Transport pricing at the level of the firm is addressed. The numbers of full fare passengers travelling on three routes of two competing bus companies are analysed using a multiplicative discontinuous price model. Results show that generally only the operator increasing the price suffers a loss of passengers and the price elasticity is a non-linear function of the resulting price difference. The method of analysis and the results have implications for the market modelling of fast moving consumer goods. It is noted that almost no studies of transport pricing at the level of the firm have been carried out previously because of lack of data.