Welfare-optimal public transport fares in Denmark

Public transport fare policies are important in shaping efficient, equitable, and sustainable transportation systems. In this study, we optimise a welfare function across a spectrum of flat and distance-based pricing strategies while also analysing the distributional impacts and effects on equity. The analysis reveals that a Danish distance-based fare system replicating the current prices is sub-optimal from both a welfare economic and equity perspective. Using a comprehensive demand model for weekday trips (under 50km) in Denmark, we demonstrate that a flat fare of 24.2 DKK ( ∼  € 3.24), would improve welfare and equity without causing significant operational changes. Effects are driven by consumer surplus gains and increasing market shares of active modes for shorter distances and public transport for longer distances. These mobility changes yield significant health benefits for the population and reduce environmental costs. Nevertheless, the socio-spatial distribution of welfare effects is uneven, with most gains observed in rural and suburban areas and across younger and lower-income groups.