Subject My article deals with an important problem of tariff setting for public passenger transport. Nowadays in Russia the regulation of tariffs for public passenger transport services bases on reports on operators' costs and scheduled budget subsidies for next year. I am presenting a different approach to tariff setting for public transport. The approach uses optimal models and takes into account the interests of three groups of public transport market participants (passengers, operators, authorities). Objectives I have analyzed academic literature addressing the issue of tariff policy development, presented a model of public passenger transport service market, and described the goals of each group of participants. My study includes a uniquely designed model of tariff setting, which has been tested when calculating tariffs for Perm, an algorithm of tariff setting using an optimal model. Methods I used economic-mathematical modeling to calculate optimal tariffs. Results I have built a mathematical model of tariff setting, which enables to calculate the optimal size of tariff depending on chosen variables, targeted function and a set of constraints. The presented model has been tested for tariff modeling for public transport services in Perm. Relevance The existing approach to tariff setting takes into account neither the interests of all public transport market participants, nor tariff influence on changes in transport demand and supply. In addition, nowadays the methods of tariff setting and the data, which are furnished by operators, are not clear enough. To solve this problem, I am presenting an optimal model of tariff setting, which takes into account the interests of all public transport service participants.
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