Season Tickets and the Demand for Public Transport

In view of the rising external costs of private road transport, inducing motorists to shift to transport modes that generate fewer negative externalities is a major policy goal in many cities. This paper argues that if season tickets for public transport are cheap and attractive enough so that most car owners buy them, then holders face zero marginal pecuniary costs of use and a significant modal switch is plausible, provided that service frequency, speed and other quality attributes are adequate. Using a simple model, we show that this two part tariff or public transport club can generate welfare gains in the form of reduced car use as well as higher revenue. The model is tested with 25 years of data from four Swiss cities. Results from seemingly unrelated regression estimation indicate large season ticket effects on the demand for public transport.