Published in Archiv für Sozialwissenschaft und Sozialpolitik 50, pp. 653–700, Engländer’s article explains passenger fares through journey purposes, travelers’ resources, and transport undertakings’ objectives. Its two parts examine the effects of fares and tariff construction under monopoly, competition, and public-benefit management. Neither distance nor operating costs alone explain pricing: analysis must begin with differentiated willingness to pay.
Engländer distinguishes consumption journeys, undertaken for subjectively valued satisfactions, from income-seeking journeys directed toward monetary returns. For consumption travel, willingness to pay connects subjective priorities with material means. Maximum expenditure depends on resources remaining after more urgent needs have been satisfied; other journey expenses must then be deducted to establish the maximum fare.
Der Höchstbetrag, den die Wirtschaft für eine solche Reise hinzugeben bereit ist, ergibt sich nach folgenden Gesichtspunkten.
English translation: The maximum amount which the household economy is prepared to give up for such a journey results from the following considerations.
This household-level inquiry grounds distinctions among journeys prompted by fixed occasions, repeatable visits, excursions, holidays, and the acquisition or consumption of goods. Fixed destinations differ from discretionary choices among destinations. Repeated visits introduce diminishing marginal importance and a willingness-to-pay paradox: the maximum total payment obtainable for several journeys may be lower than that obtainable for fewer. In holiday travel, alternative pleasures, available time, and non-fare expenses complicate the relationship between distance, subjective value, and expenditure.
Bei Reisen mit festen Anlässen spielt die Entfernung für den Wert keine Rolle, ebenso nicht bei Reisen zu Besuchszwecken.
English translation: In the case of journeys with fixed occasions, distance plays no part in the value, and likewise not in the case of journeys undertaken for purposes of visiting.
Distance cannot therefore serve as a universal measure of transportation’s benefit. Nor does greater wealth necessarily produce proportionately more journeys. Engländer separates the ability to pay more for a given journey from the decision to undertake additional or longer journeys.
Die andere Frage ist die, ob die Wirtschaft größeren Vermögens bei gegebenem Fahrpreis mehr und weitere Reisen unternimmt als die Wirtschaft geringeren Vermögens.
English translation: The other question is whether, at a given fare, the household economy of greater wealth undertakes more and longer journeys than the household economy of lesser wealth.
This distinction undermines any uniform law connecting fare reductions with increased traffic. A reduction may leave household choices unchanged, enable another journey, or admit a previously excluded income group. Revenue gains may depend more on recruiting new travelers than on increasing existing passengers’ travel frequency. Where urgent needs absorb all resources, higher incomes or cheaper necessities may matter more than lower fares.
Business travel follows a different logic: transport expenses may constitute such a small part of the transactions facilitated that substantial fare changes scarcely affect journeys. Commuting connects residential choice with employment. Willingness to pay reflects the advantages of living away from work, while one residential decision generates repeated journeys. Housing constraints can consequently delay responses to cheaper transport.
The second part translates these distinctions into tariff theory. A monopolist seeks maximum net revenue but cannot readily observe each passenger’s resources or purpose. Distance, carriage classes, faster services, occupational concessions, excursion trains, and season tickets provide indirect ways to distinguish demand. Distance tariffs depend on contingent associations between journey length and willingness to pay, not on distance necessarily creating greater value. Comfort and speed can attract supplementary payments; restricted concessions can recruit lower-paying passengers without reducing charges for everyone. Repetition alone does not justify a discount.
Costs constrain this strategy without determining every fare. Engländer distinguishes additional costs caused by traffic from allocated shares of common expenses. Additional passengers may be profitable without covering a proportionate share of total costs. Competition strengthens cost constraints, yet common costs still permit differentiated charges. Similar tariff structures can thus arise under different institutional objectives.
The conclusion rejects universal free transport because journeys consume scarce resources with alternative uses. Public-benefit management generally requires cost recovery, including interest and amortization, while favoring reductions that generate additional traffic even when net revenue falls. Fuller use of existing facilities can justify fares covering only additional costs, but taxation to finance a shortfall may impose greater losses elsewhere. Social concessions should therefore be distinguished when evaluating economic performance. The article connects heterogeneous travel purposes, imperfectly observable demand, common costs, and public finance within a unified theory of passenger pricing.
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