Browsing by Author "Silva Montalva, Hugo Emilio"

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    Fare evasion in public transport: How does it affect the optimal design and pricing?
    (Elsevier Ltd, 2023) Ramos Guerrero, Raúl Alfonso; Silva Montalva, Hugo Emilio; CEDEUS (Chile)
    © 2023 Elsevier LtdFare evasion produces significant revenue losses in public transport systems. Recent research has found that low service quality and high prices are important determinants of fare evasion. However, the economic literature that studies the optimal public transport provision has overlooked the phenomenon. We develop a demand model of horizontal differentiation to investigate how fare evasion affects the design and pricing of public transport that maximizes utilitarian social welfare. We show analytically that fare evasion can create incentives to reduce public transport prices and improve service quality, putting upward pressure on its subsidization. We perform numerical simulations and sensitivity analysis to quantify the impact of these incentives on the public transport provision. These simulations confirm that the incentive to reduce fare evasion can lead to an optimal design and price that requires subsidies.
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    Optimal pricing of flights and passengers at congested airports and the efficiency of atomistic charges
    (2013) Silva Montalva, Hugo Emilio; Verhoef, Erik T.
    This paper investigates and compares airport pricing policies under various types of competition, considering both per-passenger and per-flight charges at congested airports. We show that an airport requires both pricing instruments to achieve the first-best outcome, and we distinguish their role by showing that congestion externalities need to be addressed through per-flight tolls whereas the inefficiency caused by airlines' market power exertion must be corrected with per-passenger subsidies. We also show that Bertrand competition with differentiated products, a type of behavior recently pointed out by the empirical literature as pertinent, has policy implications that diverge from analyses that assume Cournot competition. The welfare gains and congestion reductions of congestion pricing would be higher than what has been advanced before; the degree of self-financing of airport infrastructure under optimal pricing would be increased and may approach exact self-financing; and the implied differentiation of charges between (asymmetric) airlines would be significantly smaller, presumably enhancing the political feasibility of welfare maximizing congestion pricing, as the potential distributional concerns would be decreased. Finally, we numerically analyze second-best policies, and find that atomistic pricing may offer a relatively attractive alternative to first-best congestion pricing. (C) 2013 Elsevier B.V. All rights reserved.