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Price versus Commitment: Managing the demand for off-peak train tickets in a field experiment

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  • Thommen, Christoph
  • Hintermann, Beat

Abstract

Using data from a field experiment, we provide estimates for the own-price elasticity of train travel in Switzerland. Our estimates are based on exogenous changes to the level of discounts for long-distance trains and thus avoid the usual endogeneity problem between demand-dependent discounts. Besides the price, we also vary the gap between the early booking period and departure during the experiment, which allows us to recover the relative effectiveness of pricing and timing measures. We compute own-price elasticities of around −0.7. Ending the early booking period on midnight of the previous day rather than one hour before departure leads to a decrease in the sale of discount tickets by 18–30%, which is equivalent to a price increase by 26–43%. Last, we find that increasing the discount causes people to purchase their tickets at an earlier time, which allows us to quantify the value of commitment. Our results help design measures for peak-shifting in transport at least societal cost.

Suggested Citation

  • Thommen, Christoph & Hintermann, Beat, 2023. "Price versus Commitment: Managing the demand for off-peak train tickets in a field experiment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 174(C).
    • Handle: RePEc:eee:transa:v:174:y:2023:i:c:s0965856423001118
    DOI: 10.1016/j.tra.2023.103691
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    More about this item

    Keywords

    Field experiments; Public transport; Trains; Dynamic pricing; Peak pricing; Switzerland;
    All these keywords.

    JEL classification:

    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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