Institute for Transport Studies (ITS)

Pricing Transport Services

How should we set transport prices?

Can transport prices be left to the market? Will transport operators make fair and efficient pricing decisions? What happens when operators change prices? What happens if we control prices? Can we ensure prices reflect costs? Do users understand pricing systems? What happens if we make it free?

In market economies, price is the main mechanism for allocating resources efficiently. But as well as setting price to reflect the resource cost to society of choices people make - what we would term ‘efficient pricing’ -  it is also used to raise revenue to cover costs and make profits for commercial operators. That’s why train prices are so complex! There is often a tension between efficient pricing and commercial pricing, so understanding how people respond to prices and what firms are trying to achieve are crucial in getting the price right.

We conduct strategic studies for the Department for Transport and the European Commission, generate evidence on sensitivity to price for operators and industry bodies, develop new techniques for understanding the relationship between different prices, estimate efficient prices which include all relevant costs, and much, much more! 

Recent research outputs:

Mackie, P.J., Dargay, J.M., Liu, R., Nellthorp, J., Shires, J., Smith, A.S.J., Toner, J.P., Wheat, P., Last, A., and Goodwin, P.B. (2010) ‘Concessionary Travel: the Research Papers’. Institute for Transport Studies, University of Leeds, pp1-302.

Whelan, G.A., Batley, R.P., Shires, J.D., and Wardman, M.R. (2008) Optimal fares regulation for Britain's railways. Transportation Research Part E: Logistics and Transportation Review, 44, pp807-819.

Bonsall, P., Shires, J., Maule. J., Matthews, B., and Beale, J. (2007) Responses to complex pricing signals: theory, evidence and implications for road pricing. Transportation Research Part A: Policy and Practice, 41, pp672-683.

Bickel, P., Friedrich, R., Link, H., Stewart, L., and Nash, C.A. (2006) Introducing environmental externalities into transport pricing - measurement and implications. Transport Reviews, 26, pp389-415.

Paulley, N., Balcombe, R., Mackett, R., Titheridge, H., Preston, J.M., Wardman, M.R., Shires, J.D., and White, P. (2006) The demand for public transport: the effects of fares, quality of service, income and car ownership. Transport Policy, 13, pp295-306.

For further information, please contact: Dr Jeremy Toner or Professor Mark Wardman