Wednesday, December 19, 2007

Psst, wanna ride a train? 

What should be the price of a ride on a public train? One of the things we know from basic microeconomics is that some element of price discrimination -- getting more from the inelastic demand riders and then offering a lower price from those with more elastic demand -- should result in more riders. If the purpose of LRT is to get cars off the street, finding ways to separate those groups and charge different prices will help.

Craig Westover and I exchanged some email about this a few weeks ago, and he now has an op-ed in which he tries to use a two-tier pricing mechanism to generate a proper price for transit and in the meantime provide a market for trading riding rights that could be income support for those with lower incomes. It's an intriguing idea. You cannot expand it too much, of course, because one problem with LRT will be congestion -- if the train is too crowded, you drive both the low price and high price riders off it. But I don't see the problem as being insurmountable.

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