Empirical Evidence on the Relationship between Fare and Travel Distance

Abstract

The literature has discussed the relationship between fare and travel distance theoretically, but the empirical evidence supporting the conclusions is limited. This article provides a review of fare schemes for several public transport modes operating under both high- and low levels of regulation in Norway. A general model for the passenger transport market is presented and the derived relationships between fare and trip distance under different company goals and forms of competition are discussed in relation to the empirical evidence. The empirical evidence confirms a close relationship between fare and distance and largely supports the conclusions of the theoretical model with respect to how firm goals and quality influence fares. Perhaps surprisingly, transport firms able to set fares freely demonstrate more or less the same close relationship between fares and travel distance as companies with regulated fare schemes. The empirical review provides information relevant for the practical application of theoretical models derived in previous studies.