How Does Concern for Low-income Individuals Affect Optimal Public Transport Policy In a Small City?

This paper evaluates the impact of different sets of distributional weights on optimal bus fares and frequencies in the small Swedish city of Uppsala, with a two-way public transport demand per bus line of 200 pax/h in peak and 100 pax/h in off-peak. One result is that, compared with the welfareoptimal scenario without distributional weights, increasing the weights of the low-income group successively increases service frequencies. However, a more pronounced result is that a weight as low as 1.3 on low-income individuals' well-being (expressed in willingness to pay) is enough to justify a free-fare policy for this group.