The asymmetric effects of gasoline prices on public transportation use in Taiwan

This study investigates the asymmetric effects of gasoline prices on public transportation use in Taiwan. The empirical results obtained are as follows. First, we verify that gasoline price is an important determinant of transit demand. Gasoline prices have significantly positive effects on bus and mass rapid transit (MRT) use. Second, MRT ridership is more sensitive than bus and railway ridership to gasoline price and income. In the face of oil prices escalation and economic growth, the MRT system should have higher priority in public transportation planning. Third, the effects of gasoline prices on bus and MRT use are asymmetric. Bus and MRT use increases faster when gasoline prices rise than it decreases when gasoline prices fall. The transit agencies should adjust operating strategies faster in the rising of oil prices than in the falling of oil prices. It is important for transit planning to use oil prices as signals and increase the flexibility of operation in dealing with the changes in ridership. Some strategies, such as enhancing the availability of transfer information and updating transit information timely, are helpful to move passengers efficiently.     

The effect of income on car ownership: evidence of asymmetry

This paper examines the effect of income on car ownership, and specifically the question of hysteresis or asymmetry. Although there is little doubt that rising income leads to higher car ownership, less is understood about the effect of falling income. Traditional demand modelling is based on the implicit assumption that demand responds symmetrically to rising and falling income. The object of this study is to test this assumption statistically. Using a dynamic econometric model relating household car ownership to income, the number of adults and children in the household, car prices and lagged car ownership, income decomposition techniques are employed to separately estimate elasticities with respect to rising and falling income. The equality of these elasticities – no hysteresis – is tested statistically against the inequality – hysteresis – hypothesis. Various functional specifications are tested in order to assure the robustness of the results to assumptions concerning functional form. The estimation is based on cohort data constructed from 1970 to 1995 UK Family Expenditure Surveys, and a pseudo-panel methodology is employed. The results indicate that car ownership responds more strongly to rising than to falling income – there is a ‘stickiness’ in the downward direction. In addition, there is evidence that the income elasticity is not constant, but instead declines with increasing car ownership.     

Imperfect reversibility of air transport demand: Effects of air fare,fuel prices and price transmission

There are recent evidence that air transport demand may not have a perfectly reversible relationship with income and jet fuel prices, as is assumed in most demand models. However, it is not known if the imperfectly reversible effects of jet fuel price are a result of asymmetries in the supply side, i.e., asymmetries in cost pass through from fuel prices to air fare, or of demand side behavioral asymmetries whereby people value gains and losses differently. This paper uses US time series data and decomposes air fare and fuel price into three component series to develop an econometric model of air transport demand that is capable of capturing the potential imperfectly reversible relationships and test for the presence or absence of reversibility. We find that air transport demand shows asymmetry with respect to air fare, indicating potential imperfect reversibility in consumer behavior. We also find evidence of asymmetry and hysteresis in cost pass-through from jet fuel prices to air fare, showing rapid increases in airfare when fuel prices increases but a slower response in the opposite direction.     

The asymmetric effects of income and fuel price on air transport demand

Forecasts of passenger demand are an important parameter for aviation planners. Air transport demand models typically assume a perfectly reversible impact of the demand drivers. However, there are reasons to believe that the impacts of some of the demand drivers such as fuel price or income on air transport demand may not be perfectly reversible. Two types of imperfect reversibility, namely asymmetry and hysteresis, are possible. Asymmetry refers to the differences in the demand impacts of a rising price or income from that of a falling price or income. Hysteresis refers to the dependence of the impacts of changing price or income on previous history, especially on previous maximum price or income. We use US time series data and decompose each of fuel price and income into three component series to develop an econometric model for air transport demand that is capable of capturing the potential imperfectly reversible relationships and test for the presence or absence of reversibility. We find statistical evidence of asymmetry and hysteresis – for both, prices and income – in air transport demand. Implications for policy and practice are then discussed.     

Asymmetric responses of highway travel demand to changes in fuel price: An explanation via fuel price uncertainty

Previous research has examined asymmetric effects of fuel price uncertainty on energy demand. If we consider that energy demand is related to travel demand, the changes in fuel prices may have asymmetric effects on highway travel demand via fuel price uncertainty. In other words, when in general fuel price is steadily rising, the highway traffic volume decreases by a small percentage. On the other hand, the highway traffic volume increases by a large percentage when fuel prices are falling. We hypothesize that the uncertainty in fuel prices generates this kind of asymmetric effect on highway traffic volume in Korea. We use the Korean monthly fuel price and highway traffic volume data from 2001 to 2009, and define the intra-month (weekly) fuel price changes as monthly fuel price volatility which is a proxy for monthly fuel price uncertainty. We found that the direction of the change in fuel prices had asymmetric effects on highway travel demand and that the fuel price uncertainty led drivers to respond asymmetrically to the changes in fuel prices.     

The effect of the price of gasoline on the urban economy: From route choice to general equilibrium

RELU-TRAN2, a spatial computable general equilibrium (CGE) model of the Chicago MSA is used to understand how gasoline use, car-VMT, on-the-road fuel intensity, trips and location patterns, housing, labor and product markets respond to a gas price increase. We find a long-run elasticity of gasoline demand (with congestion endogenous) of ?0.081, keeping constant car prices and the TFI (technological fuel intensity) of car types but allowing consumers to choose from car types. 43% of this long run elasticity is from switching to transit; 15% from trip, car-type and location choice; 38% from price, wage and rent equilibration, and 4% from building stock changes. 79% of the long run elasticity is from changes in car-VMT (the extensive margin) and 21% from savings in gasoline per mile (the intensive margin); with 83% of this intensive margin from changes in congestion and 17% from the substitution in favor of lower TFI. An exogenous trend-line improvement of the TFI of the car-types available for choice raises the long-run response to a percent increase in the gas price from ?0.081 to ?0.251. Thus, only 1/3 of the long-run response to the gas price stems from consumer choices and 2/3 from progress in fuel intensity. From 2000 to 2007, real gas prices rose 53.7%, the average car fuel intensity improved 2.7% and car prices fell 20%. The model predicts that from these changes alone, keeping constant population, income, etc. aggregate gasoline use in this period would have fallen by 5.2%.     

Impact of fuel price on vehicle miles traveled (VMT): do the poor respond in the same way as the rich?

The effects of fuel price on travel demand for different income groups reveal the choices and constraints they are faced with. The first purpose of this study is to understand these underlying choices and constraints by examining the variation of fuel price elasticity of vehicle miles travelled (VMT) across income groups. On the other hand, the rebound effect—increase in VMT as a result of improvement in fuel efficiency may offset the negative effect of fuel price on VMT. The second purpose of this study is to compare the relative magnitudes of the fuel price elasticity of VMT and the rebound effect. A system of structural equations with VMT and fuel efficiency (MPG, miles per gallon) as endogenous variables is estimated for households at different income levels from 2009 National Household Travel Survey. Higher income households show greater fuel price elasticity than lower income households. Fuel price elasticities are found to be ?0.41 and ?0.35 for the two highest income groups, while an elasticity of ?0.24 for the lowest income group is identified. The rebound effect is found to be only significant for the lowest income households as 0.7. These findings suggest the potential ability of using fuel price as a tool to affect VMT. The study results also suggest possible negative consequences faced by lower income households given an increase in fuel price and call for more studies in this area.     

The effect of prices and income on car travel in the UK

The objective of this paper is to analyse the factors determining household car travel, and specifically the effects of household income and the prices of cars and motor fuels, and to explore the intertemporal pattern of adjustment. The question of asymmetry in the response to rising and falling income is also addressed. Such asymmetry may be caused by habit or resistance to change or the tendency to acquire habits to consume more easily than to abandon them. The impact of prices, the speed of adjustment and the resistance to change will be important in determining the possibility of influencing travel behaviour and specifically car use. The study utilises repeated cross-section data from the annual UK Family Expenditure Surveys and employs a pseudo-panel methodology. The results are compared with those for car ownership estimated on the basis of similar models.     

Interpreting employee telecommuting adoption: An economics perspective

Travel demand is derived from activities at the trip destination; therefore, media that have the potential to provide services previously only supported by transportation will have a chance to be chosen by passengers. The idea of telecommuting is considered the most promising substitute of work trips and thus a good strategy of transportation demand management. From a microeconomics perspective, demand for goods or services can be interpreted as a function of prices and generalized income. Therefore, telecommuting adoption is viewed as a trade-off among the prices of telecommuting itself, substitutes, and complements, as well as generalized income and situational constrains incurred by the employee. The underlying rationale is interpreted by elasticity analysis of aggregate telecommuting demand, based on an adoption model, with respect to various decision variable. The results indicate that the elasticity with respect to the price that the employee may incur in order to telecommute is the largest one, and the elasticity with respect to the living space at home is the second one. Additionally, all of the elasticities found in the group of employees currently commuting by private transportation are greater than the corresponding ones found in the group of transit riders. These findings are expected to have significant implications of transportation policies. This revised version was published online in June 2006 with corrections to the Cover Date.     

Estimating fuel demand elasticities to evaluate CO2 emissions: Panel data evidence for the Lisbon Metropolitan Area

This paper estimates fuel demand models for the Lisbon Metropolitan Area (AML) and uses the demand elasticities obtained to predict future levels of road transport CO₂ greenhouse gas emissions. Data for the municipalities constituting the AML and the period 1993–2010 are analysed using static and dynamic panel data models to measure the relative importance of fuel price, income, vehicle stock, the price of public transport, and the availability of urban and suburban rail networks on fuel demand. To the best of our knowledge, this is the first study in the Portuguese context to produce fuel demand elasticities for a specific metropolitan area, as opposed to the estimation of country-level aggregate elasticities. Our findings indicate that the elasticity of fuel demand with respect to fuel price ranges between −0.48 and −0.72 in the short run and between −1.19 and −1.82 in the long run. Income elasticities are found to range between 0.51 and 0.54 in the short run and between 1.26 and 1.37 in the long run. The elasticity of fuel demand with respect to vehicle stock (keeping population constant) is 0.57 in the short run and 1.43 in the long run. There is only weak evidence of a reduction in fuel demand as a result of a decrease in the price of public transport, and no effect of greater availability of rail networks. Based on the elasticities estimated, we predict road transport CO₂ emissions for the AML according to different macroeconomic scenarios. The results indicate that the emissions target is only achieved in the scenario of poor economic performance. In the presence of medium and strong economic growth, fuel prices would need to increase by about 7% and 11% per year respectively in order to meet the emissions target.     

<Emphasis Type="Italic">Not</Emphasis> driving alone? American commuting in the twenty-first century

This paper investigates recent commuting trends by American workers. Unlike most studies of commuting that rely on data from the American Community Survey this study utilizes the American Time Use Survey to detail the complex commuting patterns of modern-day workers. Changes in the price of gasoline in recent years suggest that the incidence of “driving alone” should be on the decline. Indeed, results show that the sensitivity of modal commuting with respect to changes in gasoline prices appears to be relatively large. We estimate the gasoline-price elasticity of driving alone to be 0.057 and the gasoline-price elasticity of carpooling to be 0.502. Additional factors also affect commuting, including socio-economic characteristics and social desires. However, it is changes in gasoline prices that appear to account for nearly all of the recent variation in the mode chosen for commuting.     

Elasticities of fuel and traffic demand and the direct rebound effects: An econometric estimation in the case of Norway

We estimate the elasticities of fuel and travel demand with respect to fuel prices and income in the case of Norway. Furthermore, we derive the direct rebound effects that explain the degree to which a fuel price increase is “offset” in the form of greater fuel use and/or travel due to improvements in vehicle fuel efficiency. For this purpose, we use and compare two alternative econometric approaches: the error correction model (ECM) and the dynamic model. Our initial assumption is that one should not be indifferent with respect to the approach used to derive elasticities. The data used are for the period 1980–2011. Our results indicate the following: (1) the dynamic model fits the data better than the ECM model does; (2) the estimated elasticities of fuel demand with respect to price and income are −0.26 and 0.06 in the short run and −0.36 and 0.09 in the long run. For travel demand, the respective elasticities are −0.11 and 0.06 in the short run and −0.24 and 0.13 in the long run, implying inelastic demands for fuel and travel demand; and (3) rebound effects indicate that 0.26% and 0.06% of fuel savings as a result of fuel price increase will be offset in the form of more fuel use in the short run and in the long run, respectively, if fuel efficiency increases by 1%. Our policy recommendations are that policies should not be indifferent to the methods used to derive elasticities. We contend that it is crucial to seriously consider rebound effects in policy making because basic elasticity estimates exaggerate the impact of fuel price increases.     

Empirical estimation of price and income elasticities of air cargo demand: The case of Hong Kong

This paper estimates the price and income elasticities of air cargo demand and examines how they may change after the 2008 financial crisis. Using a set of time series data, we simultaneously estimate the aggregated demand and supply functions of air cargo at Hong Kong International Airport (HKIA). We find that during the entire sampling period of 2001–2013, the price elasticity for air cargo transport demand at HKIA ranges from −0.74 to −0.29, suggesting that air cargo demand in Hong Kong reacts negatively to price (as expected) but does not appear to be very sensitive to price. The income elasticity ranges from 0.29 to 1.47 and appears sensitive to seasonality adjustment approaches. However, in terms of the speed of changes, air cargo demand changes much faster than overall economy, indicating the presence of a pro-cyclical pattern of air cargo traffic with respect to the overall economy. Our analysis shows that air cargo demand becomes more sensitive to changes in both price and income after 2008.     

A repeated cross-sectional evaluation of car ownership

This paper studies changes in the relationship between household car ownership and income by household type. Ordered response probit models of car ownership are estimated for a sample of households repeatedly at six time points to track the evolution of income elasticities of car ownership over time. Elasticities of car ownership are found to change over time, questioning the existence of a unique equilibrium point between demand and supply that is implicitly assumed in traditional cross-sectional discrete choice car ownership models. Moreover, different household types and households that underwent household type transitions showed differing patterns of change in elasticities. Observed trends in car ownership and income clearly show behavioral asymmetry where the elasticity of procuring an additional car is greater than that of disposing a car. This too shows the inadequacy of traditional cross-sectional models of car ownership which tend to predict symmetry in behavior. The study suggests the importance of incorporating dynamic trends into the forecasting process, which can be accomplished through the use of longitudinal data.     

Meta-analysis of public transport demand

The present study uses meta-regression in order to explain the wide variation in elasticity estimates obtained in previous demand studies, and provide summaries of several bus demand elasticities.One important finding as to the price elasticity is that the often cited rule of thumb of −0.3 holds good if quality of service represented by vehicle-kilometres is treated as an exogenous variable, but not when it is treated as endogenous.Based on the results it is recommended that demand models should include car ownership, price of petrol, own price, income and some measure of service among the explanatory variables and that the service variable should be treated as endogenous.In previous meta-studies in this field focus has been on own price elasticity only while this study also includes elasticities with respect to, level of service, income, price of petrol and car ownership. The short run for the US are found to be −0.59, 1.05, −0.62, 0.4 and −1.48 respectively.     

Measuring unobserved prices using the structural time-series model: The case of cycling

This study presents a means of determining a historic (generalised cost based) price index for cycling in the UK for the period 1949–2006 using annual demand data. By specifying demand as a function of generalised price and income and then applying a structural time-series model to elucidate the unobserved component of prices (while controlling for observed income levels), it is illustrated that the role of prices in influencing demand is non-trivial. Over the sample period price responses generally influence demand for cycling to a greater extent than income effects.     

The impact of fare and gasoline price changes on monthly transit ridership: Empirical evidence from seven U.S. transit authorities

This paper presents eight empirical models of monthly ridership for seven U.S. Transit Authorities. Within the framework of these models, the impacts upon monthly ridership from changes in the real fare and gasoline prices are examined. Important findings are: (1) the elasticities of monthly transit ridership with respect to the real fare are negative and inelastic, ranging from 0.042 to 0.62; and (2) the elasticities of monthly transit ridership with respect to the real gasoline price are positive and inelastic, ranging from 0.08 to 0.80. Such results have important policy implications for decisions based on the relationships of price, revenue, and ridership; and for assessing the impacts of changing gasoline prices upon urban modal choice.     

Auto travel fuel elasticity in a rapidly developing urban area

This paper presents results of a study conducted to quantify the effect of fuel cost increases on household auto travel in Riyadh, the rapidly developing capital of Saudi Arabia. Responses of a stratified random sample of 1648 individual households provided the data base for the analysis. The auto trip measures of shrinkage ratio, arc and log-arc elasticities were calculated for households categorized by income and family size. The elasticity measures suggested the existence of significant relationship among the factors of fuel cost, the number of daily auto trips, and family size. It was found that as fuel prices increased, the number of daily trips decreased, and that this decrease in daily trips was greater with larger family size. A step-wise multiple regression analysis with three independent variables of car ownership, family size, and daily fuel expenditures was developed. The model was fairly accurate in predicting variations in daily household travel. The regression parameter of the variable fuel cost was also used to derive demand elasticity to fuel expenditures. Elasticity measures ranged between -0.30 and -0.37.     

The systemic,long-run relation among gasoline demand,gasoline price,income, and vehicle ownership in OECD countries: Evidence from panel cointegration and causality modeling

This paper looks at relationships between gasoline consumption per capita, income, gasoline price, and car ownership for a panel of OECD countries. Estimated long-run and short-run income elasticities are smaller than typically found and gasoline consumption is Granger-caused by gasoline price, but not by car ownership or income. Car ownership is Granger-caused by income and at the margin by gasoline consumption, but not by gasoline price.