Fair ticket pricing in public transport as a constrained cost allocation game

• Published in: Annals of operations research Vol. 226; no. 1; pp. 51 - 68
• Main Authors: Borndörfer, Ralf, Hoang, Nam-Dũng
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.03.2015; Springer; Springer Nature B.V
• Subjects: Accounting and auditing; Allocation (Accounting); Allocations; Business and Management; Combinatorics; Constraints; Cost allocation; Cost recovery; Distribution costs; Economic aspects; Game theory; Integer programming; Marketing; Maximization; Methods; Networks; Operations research; Operations Research/Decision Theory; Prices; Pricing; Pricing policies; Public transportation; Studies; Theory of Computation; Tickets; Netherlands; 91-08; (; Constrained cost allocation games; Least core; 90C90; Fair ticket prices; Nucleolus; 91A80; ,
• ISSN: 0254-5330; 1572-9338
• DOI: 10.1007/s10479-014-1698-z

Ticket pricing in public transport usually takes a welfare maximization point of view. Such an approach, however, does not consider fairness in the sense that users of a shared infrastructure should pay for the costs that they generate. We propose an ansatz to determine fair ticket prices that combines concepts from cooperative game theory and linear and integer programming. The ticket pricing problem is considered to be a constrained cost allocation game, which is a generalization of cost allocation games that allows to deal with constraints on output prices and on the formation of coalitions. An application to pricing railway tickets for the intercity network of the Netherlands is presented. The results demonstrate that the fairness of prices can be improved substantially in this way.