In what situation might railway companies implement price increases effectively?

Railway companies are likely to implement price increases effectively during peak times of inelastic demand because, at these times, consumers' sensitivity to price changes diminishes. When demand is inelastic, it means that consumers will continue to buy a product or service even if prices rise, as they have a strong need or limited alternatives. In the case of peak travel times, passengers often have fewer options for travel, and the urgency to reach their destinations can make them less price-sensitive.

This strategy allows companies to increase revenue without significantly losing customers, as travelers are often committed to their travel plans and may have no choice but to pay the higher fare. In contrast, during off-peak hours, demand is likely to be more elastic, meaning that price increases might deter passengers from traveling. Similarly, when demand is elastic, a rise in prices could lead to a significant drop in the number of tickets sold. Therefore, timing the price increases for periods of inelastic demand maximizes revenue potential.