OPTIMAL PRICING OF URBAN TRIPS WITH BUDGET RESTRICTIONS AND DISTRIBUTIONAL CONCERNS

Urban transport is modelled as a set of services provided by an integrated transport sector, the objective of which is to set prices and to invest in service infrastructure so as to maximise a social welfare function over the community. An integrated transport sector that has concerns about pricing its services to reflect the cost of congestion, about balancing its budget and about the effects of its prices on individuals at different income levels, will find the first-order optimality equations derived in this paper useful as a source of relationships to consider when formulating policy.