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Measuring long-run price elasticities in urban travel demand

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  • Javier Donna

    (University of Florida)

Abstract

This paper develops a structural model of urban travel to estimate long-run price elasticities. A dynamic discrete choice demand model with switching costs is estimated, using a panel dataset with public market-level data on automobile and public transit use for Chicago. The estimated model shows that long-run own- (automobile) and cross (transit) price elasticities are more elastic than short-run elasticities, and that elasticity estimates from static and myopic models are downward biased. The estimated model isused to evaluate the response to a gasoline tax. Static and myopic models mismeasure long-run substitution patterns, and could lead to incorrect policy decisions.

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  • Javier Donna, 2021. "Measuring long-run price elasticities in urban travel demand," Working Papers 74, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:74
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/74.pdf
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    Keywords

    Long-run price elasticities; Dynamic demand travel; Hysteresis;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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