A Market Pricing Approach to Fares

Grovak, Michael; ,

A Market Pricing Approach to Fares

by Michael Grovak,

Document Type: Proceeding Paper

Part of: Managing Urban Transportation with Limited Resources

Abstract:

The Chicago Transit Authority's (CTA's) historical 'one city - one fare' policy overlooks an important principle elucidated in the current literature; various of its rider segments perceive that they receive transportation services of different value, and thus would be willing to pay widely different fare rates. Some of these rates are higher than presently paid, and could result in significantly higher revenues than at present, with small losses in ridership. In the first three months of 1982, CTA formulated ten proposals for changes in its fare structure which sought to capture higher revenue by targeting appropriate market segments. These proposals included a zone fare on CTA's rapid transit system, a Central Business District surcharge, peak/off-peak fare differentials, a surcharge for all rapid transit and express bus rides, an increase in the transfer charge, and a surcharge for bus-rapid transit transfers.

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