Advanced Search
MyIDEAS: Login to save this paper or follow this series

Second Best Decision Making of Railway Operators: How to fix Fares, Frequency and Vehicle Size


Author Info

  • Piet Rietveld

    (Vrije Universiteit Amsterdam)

  • Stefan van Woudenberg

    (Vrije Universiteit Amsterdam)


Railway networks are characterised by variations in demand on different links. Optimal strategies therefore call for a differentiated treatment of fares, frequencies and vehicle sizes in various links. However, for several reasons, railway operators may apply uniform levels for these decision variables. In this paper we investigate the welfare losses implied by uniform setting of fares per km, frequencies or vehicle sizes. This is done within the context of a model with uniform cost structures, uniform price elasticities, uniform demand levels across the day, but with demand levels that vary across segments of the network. We demonstrate that the largest welfare loss results when frequencies are made uniform across links. Welfare losses due to making vehicle size and price per km uniform across links are smaller. We further find that when capacity, represented by frequency and vehicle size, is set at its optimal level at the various network segments, the contribution of price differentiation to social welfare is very limited. These results suggest that where differentiated prices are important to address issues like congestion and directional asymmetries in demand, differentiated supply in terms of vehicle size and in particular frequences are the preferred way of addressing demand variations on different segments in a network.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-007/3.

as in new window
Date of creation: 15 Jan 2007
Date of revision:
Handle: RePEc:dgr:uvatin:20070007

Contact details of provider:
Web page:

Related research

Keywords: Railways; fares; second best; frequency; vehicle size; demand variations;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Erik Teodoor Verhoef & Jan Rouwendal, 2003. "Pricing, Capacity Choice and Financing in Transportation Networks," ERSA conference papers ersa03p41, European Regional Science Association.
Full references (including those not matched with items on IDEAS)



This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:dgr:uvatin:20070007. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.