Hot Cuppa

The Citybike system of Vienna consists of a network of stations in all regions of the city. Once you have registered for the first time you can take your bicycle from any of these stations and leave it at any other. Looking into it combined with the city wide cycling roads one can realize that the authorities are offering the habitants an alternative for public transport system which indeed is in some sense healthier for both the user and the whole society.

One interesting part of the system is its pricing mechanism. You don't need to pay for the first hour but if you ride for two hours you have to pay one Euros for both. The price per hour goes up as you take it for longer periods. For the third hour you will pay 2 Euros per each and if you use it for more than 3 hours then you pay 4 Euros. So a simple calculation shows that if you take it for 5 hours for example you have to pay 20 Euros.

Some friends may see something strange there. Why you have to pay that large amount of money for renting a simple bicycle provided by the municipality? This is a usual objection people make facing similar situations. The people just see the money goes out of their packets and perhaps goes to the pockets of the authorities. But they usually forget the simple fact that in the absence of price a powerful coordination mechanism is gone.

This is why despite of such complains I believe that the pricing policy is quite fair and efficient. Obviously there is high demand for using the bicycles on the one hand and limited supply capacity on the other one. It is not possible to build let say 1000 stations with 50 bicycles in each. So there should be some sort of mechanisms to allocate the limited number of bicycles to its best use: traveling inside the city instead of taking the bus or subway. Higher prices for extra hours gives an strong signal and incentive to the users not waste this limited resource by simply forgetting to return it or leaving it idol somewhere.