Gerard de Jong
Director of Signiﬁcance BV, Institute for Transport Studies, University of Leeds
Determining price elasticities of demand for rail transport
In order to apply market-can-bear tests, price elasticities of demand for rail transport need to be determined (by market segment). This refers to the final consumers of rail transport services: the travellers for passenger transport and shippers and logistics service providers in freight transport.
Price elasticities of demand for rail transport by these agents can be determined using three different methods:
- Identyify the price elasticities using existing transport models for the study area in question. These models should include the right transport choices (at least mode choice or transport chain choice). Depending on the model form, the elasticities can be read out from the estimated coefficient values or calculated from the outcomes of runs with the model for a base situation and a situation with a change in the rail transport prices.
- Develop new transport models (again for the right transport choices, such as mode choice) on available or new data. The data might involve stated preference (SP) experiments, where respondents are asked to choose between hypothetical alternatives. However, a model that is solely based on SP data is not suitable for providing elasticities; joint models on SP and data on observed choices (revealed preference) are required.
- Base the elasticities for a certain study area on a review of the literature on elasticities in freight and/or passenger transport. Here it is important to select those studies that are most transferable to the study area and the market segments studied.
The presentation will discuss all three methods giving some examples.
Gerard de Jong is Director of Signiﬁcance BV in The Netherlands and Research Professor at the Institute for Transport Studies, University of Leeds. He studied spatial economics and obtained a PhD in econometrics in 1989. He has worked on many international, national and regional model systems in passenger and freight transport. Presently he is involved in market-can bear studies in The Netherlands and Austria.