Pricing Strategies for Public Transportation

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Abstract
Pricing of most public transportation services in urban areas is the responsibility of local governments, acting either individually or jointly through metropolitan agencies. To date, local government decisions on public transportation fares typically have been shaped primarily by short-term political, fiscal, and administrative expediency. Recently, however, growing transit deficits and stringency in public subsidy budgets have demanded a more comprehensive view of public transportation pricing. This article reviews the public policy objectives commonly stated for public transportation programs, and uses them to formulate some general guidelines for pricing. The article then discusses some pricing strategies which appear from recent research and experimentation to have promise for responding to the challenges currently faced by public transportation systems.