EFFICIENCY AND EQUITY IMPLICATIONS OF ALTERNATIVE TRANSIT FARE POLICIES

This study explores efficiency and equity implications of flat fare systems using revenue, cost, trip making, and demographic data from transit operators serving the Los Angeles, Oakland, and San Diego areas. Revenues paid by transit users for each mile of service are compared with the unit costs of their trips. The ratio of users' fares to costs per mile of travel are analyzed with respect to distance, time-of-day, and rider demographics in order to draw efficiency and equity inferences. The fare structures of the three case studies were found to embody considerable inefficiencies with respect to distance and time period of travel. Short distance, off-peak patrons paid disproportionately high fares for their trips. Morning and evening peak hour passengers were also major beneficiaries of flat fare systems, on average generating revenue-to-cost ratios twenty percent below those of off-peak users. The incidence of redistributive impacts appeared less regressive among income and age groups than had been anticipated. Based upon current disparities in pricing, a range of alternative pricing scenarios was investigated. Graduated price structures appeared the most promising in equalizing price disparities and eliminating regressivity. More coarsely differentiated fare structures seemed best suited to improving each system's financial posture because of both their high revenue productivity and low collection costs. Fares differentiated by both distance and time-of-day appeared to provide a balance of efficiency equity, and revenue benefits. (UMTA)