Sub-time pricing model and effect analysis of high-speed railway

Abstract

The transportation products of High-Speed Rail (HSR) are perishable and non-storable, thus their demand which fluctuates in certain regular patterns differs at various periods. Depending on the characteristics at different periods, the differential pricing can be implemented to enhance business income effectively, as well as achieve optimization of social welfare. In this paper, we adopt the theory of Ramsey suboptimal pricing, and build a subtime pricing model of high-speed rail based on the operation cost and weights of peak and off-peak periods. On the basis of operation cost estimation on different operating frequency, and demand function fitting with questionnaire data, we conduct the parameter simulation on the effectiveness of sub-time pricing scheme, in comparison with the effectiveness of uniform pricing scheme. The result shows the dual improvement of both business profits and social welfare, and the effectiveness is increasing with the operating frequency at peak period. Therefore, the sub-time pricing model is applicable, and contributes to directing practice.