Using Demand Elasticities to “Balance” Transit Fares and Service Levels. Ian Savage Northwestern University. My basic thesis . . .
“Acceptance of inflation-indexing of fares is dependent on convincing people that fares have been set in accordance with the same level of professional determination as service frequency, rather than being set at an arbitrary level based on some historical or political precedent”
P = fare
VM = vehicle-miles (service level)
X = other demand variables outside control of transit agency (“exogenous”)
Y = other demand variables under control of transit agency (“endogenous”)
P*f(P,VM-1,X,Y) + B = c(VM)