THE EFFECTIVENESS OF DIFFERENTIAL PRICING ON ROUTE CHOICE - THE CASE OF THE MASS-TRANSIT RAILWAY OF HONG-KONG

The use of differential pricing as a means of traffic management has b een advocated by specialists in the field of transport for quite some time. Because of techical and political reasons, a full-scale pricing scheme for the use of road space has yet to be introduced. Applying th e principle to a highly automatic rail system, however, is technologic ally much more feasible. The Mass Transit Railway Corporation of Hong Kong has implemented a so-called ''revenue neutral peal pricing policy '' after the completion of a second cross-harbour route - the East Har bour Crossing - in May, 1990. Passengers travelling from Kowloon to th e central business district (including Jordon and Tsim Sha Tsui on the Kowloon side and stations from Sheung Wan to Causeway Bay on the Isla nd side) during the morning peak hour are confronted with the followin g choice: either (i) make use of the Nathan Road Corridor and pay 80 c ents on top of normal face; or (ii) take the less congested but in gen eral longer route via the East Harbour Crossing and get a 80 cents dis count. The present paper attempts to analyse the effectiveness of this differential pricing policy in diverting passengers from the overcrow ded section to the less heavily utilized route. A personal interview s urvey comprising a total of 1094 successful cases was conducted for th is purpose. The logit regression model was employed to analyse the rou te choice. It is found that income, habit and journey time are the mos t important variables determining the route choice. The effect of cost or fare difference, although large in terms of magnitude, is only mar ginally significant in the statistical sense. It is suggested that eff orts to change the passengers' habit and measures to shorten the train transfer time at the Quarry Bay Station for the East harbour Crossing users would be more effective in achieving this end. This is especial ly the case given the current political development in Hong King which renders further enlargement of the price difference a highly difficul t proposition.