02-19-2019, 09:50 AM
(02-19-2019, 09:40 AM)Spokes Wrote:(02-15-2019, 08:11 PM)danbrotherston Wrote: "As reported in the February 6, 2019 Public Transit budget information paper, GRT customer price elasticity is generally such that a 1% change in price results in a 0.3% change in ridership. In an environment of service improvements, this decrease would be experienced simply as a minor reduction to the overall rate of ridership increase. Experience has also shown that elasticity may be higher when considering fare increases greater than 5%. "
So they're willing to sacrifice 1% of ridership....in a year of ridership growth...and low gas prices, low tax hikes, and flat parking fees,
*sigh*...idiocy..."Experience has also shown that elasticity may be higher when considering fare increases greater than 5%." I wonder if staff realize that people, unlike, umm...I dunno, staff logic, does not reset yearly...a 3% hike 3 years in a row is a 9% fare hike, double the amount that risks "increased elasticity"...
This is something that's always been stuck in my head, but I've never run the numbers to see. If cutting fares increased ridership, would it not make sense to do so? Like if you cut $1million from fare rates, but the increased ridership generated $1million, wouldn't that be a win?
I guess they figure that there are some people that won't ride it no matter how cheap it is
My understanding of price elasticity is that an elasticity of 0.3 means that if fares were cut by $1M, there would be an increase in ridership that would generate about $300K. As long as elasticity is less than 1, fare increases will increase revenue, and fare cuts will decrease it.