Aggregate estimation of the price elasticity of demand for public transport in integrated fare systems: The case of Transantiago.

Abstract

Price elasticities of demand for public transport are a key determinant in evaluating the impact ofchanges in fares on user flows, yet in many integrated fare transit systems, estimating these indicators isoften hampered by two realities: the fare changes for different modes are implemented simultaneouslyand their magnitudes are highly correlated. This strong collinearity is particularly problematic in linear orlog-linear models, commonly used for elasticity estimation, and in a case study of Santiago, Chile, robustresults with such specifications proved elusive. This paper presents a method based on discrete choicemodels to estimate the elasticities in an integrated fare system that overcomes these econometricproblems, generating results that are both robust and consistent with those reported in the literature.The proposed models are also easy to update and evaluate.