Crowding levels and fare classes in public transport

In this paper attention will be restricted to fare class systems where there is no perceived difference between fare classes except for crowding effects. Apart from crowding levels, classes are considered identical. The model under consideration is a two stage model. In the first stage, public transport management decides on a price and a capacity for each fare class. In the second stage, passengers decide which class they will use, anticipating each other’s choices and the resulting levels of crowding. A Nash equilibrium results: given the choices of all other passengers, no passenger can improve his situation by moving to another class. Public transport management acts as a Stackelberg leader since it can determine which Nash equilibrium will occur in the second stage through its choice of prices and capacities.