MAXIMISATION OF PASSENGER MILES IN THEORY AND PRACTICE

The paper has compared and contrasted the implications of a public transit organization operating under a fixed subsidy or profit constraint adopting a policy of maximizing the total number of passenger miles that it sells as opposed to the "classically correct" prescription of some form of marginal cost pricing. It has also demonstrated the existence of a weighting scheme which, on the assumption of constant elasticities with respect to generalized cost, would lead to similar solutions for the two policies. Additionally, the paper has attempted to draw attention to weaknesses in the criterion of passenger mile maximization.