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The cross elasticity between gasoline prices and transit use: Evidence from Chicago

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  • Nowak, William P.
  • Savage, Ian

Abstract

This paper calculates the cross elasticity between the price of gasoline and transit ridership in Chicago using monthly data for the period between January 1999 and December 2010. Separate estimations are conducted for city heavy rail, city bus, commuter rail and suburban bus services. A 12-month difference model is used to overcome seasonality. The paper finds that the cross elasticities when gas prices were less than $3 a gallon were small, with a magnitude of less than 0.05. When prices exceeded $3 a gallon, the elasticity was larger, in the range of 0.12–0.14, for the rail modes. In the summer of 2008 when prices exceeded $4 a gallon, there was considerable responsiveness with elasticities of 0.28–0.30 for city and suburban bus, and 0.37 for commuter rail. These values are similar to, or even larger than, those found during the oil crises of the 1970s and early 1980s.

Suggested Citation

  • Nowak, William P. & Savage, Ian, 2013. "The cross elasticity between gasoline prices and transit use: Evidence from Chicago," Transport Policy, Elsevier, vol. 29(C), pages 38-45.
    • Handle: RePEc:eee:trapol:v:29:y:2013:i:c:p:38-45
    DOI: 10.1016/j.tranpol.2013.03.002
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    References listed on IDEAS

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    Cited by:

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    2. Erhardt, Gregory D. & Hoque, Jawad Mahmud & Goyal, Vedant & Berrebi, Simon & Brakewood, Candace & Watkins, Kari E., 2022. "Why has public transit ridership declined in the United States?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 161(C), pages 68-87.
    3. Davis, Lucas W., 2021. "Estimating the price elasticity of demand for subways: Evidence from Mexico," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    4. Rahman, Moshiur & Yasmin, Shamsunnahar & Eluru, Naveen, 2019. "Controlling for endogeneity between bus headway and bus ridership: A case study of the Orlando region," Transport Policy, Elsevier, vol. 81(C), pages 208-219.
    5. Avner, Paolo & Rentschler, Jun & Hallegatte, Stephane, 2014. "Carbon price efficiency : lock-in and path dependence in urban forms and transport infrastructure," Policy Research Working Paper Series 6941, The World Bank.
    6. Nocera, Silvio & Pungillo, Giuseppe & Bruzzone, Francesco, 2021. "How to evaluate and plan the freight-passengers first-last mile," Transport Policy, Elsevier, vol. 113(C), pages 56-66.
    7. Youzhi Zeng & Bin Ran & Ning Zhang & Xiaobao Yang, 2021. "Estimating the Price Elasticity of Train Travel Demand and Its Variation Rules and Application in Energy Used and CO 2 Emissions," Sustainability, MDPI, vol. 13(2), pages 1-19, January.
    8. Kushneel Prakash & Sefa Awaworyi Churchill & Russell Smyth, 2022. "Petrol prices and obesity," Health Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 1381-1401, July.

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