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Changing North American vehicle-travel price sensitivities: Implications for transport and energy policy

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  • Litman, Todd

Abstract

There is a growing interest in transportation pricing reforms (increased fuel taxes, efficient road and parking pricing, and distance-based vehicle insurance and registration fees) to help achieve various policy objectives including reduced traffic congestion, accidents and pollution emissions. Their effectiveness is affected by the price sensitivity of vehicle fuel consumption and travel, measured as elasticities (percentage change in consumption caused by a percentage change in price). Lower elasticities imply that price reforms are relatively ineffective in achieving objectives, high prices significantly harm consumers, and rebound effects are small so strategies that increase vehicle fuel efficiency are relatively effective at conserving fuel. Higher elasticities imply that price reforms are relatively effective in achieving objectives, consumers can easily reduce fuel consumption and vehicle travel, and rebound effects are relatively large. Some studies found that US price elasticities declined during the last quarter of the Twentieth Century but recent evidence suggests that vehicle travel has since become more price sensitive. This article examines evidence of changing vehicle fuel and travel elasticities, and discusses policy implications.

Suggested Citation

  • Litman, Todd, 2013. "Changing North American vehicle-travel price sensitivities: Implications for transport and energy policy," Transport Policy, Elsevier, vol. 28(C), pages 2-10.
  • Handle: RePEc:eee:trapol:v:28:y:2013:i:c:p:2-10
    DOI: 10.1016/j.tranpol.2012.06.010
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    References listed on IDEAS

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    Cited by:

    1. Zolnik, Edmund J., 2018. "Effects of additional capacity on vehicle kilometers of travel in the U.S.: Evidence from National Household Travel Surveys," Journal of Transport Geography, Elsevier, vol. 66(C), pages 1-9.
    2. Rey, David & Dixit, Vinayak V. & Ygnace, Jean-Luc & Waller, S. Travis, 2016. "An endogenous lottery-based incentive mechanism to promote off-peak usage in congested transit systems," Transport Policy, Elsevier, vol. 46(C), pages 46-55.
    3. Hymel, Kent M. & Small, Kenneth A., 2015. "The rebound effect for automobile travel: Asymmetric response to price changes and novel features of the 2000s," Energy Economics, Elsevier, vol. 49(C), pages 93-103.
    4. Bursa, Bartosz & Mailer, Markus & Axhausen, Kay W., 2022. "Travel behavior on vacation: transport mode choice of tourists at destinations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 234-261.
    5. Kent M. Hymel & Kenneth Small, 2014. "The Rebound Effect for Automobile Travel:Asymmetric Response to Price Changes and Novel Features of the 2000s," Working Papers 141503, University of California-Irvine, Department of Economics.

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