IDEAS home Printed from https://ideas.repec.org/a/eee/retrec/v62y2017icp25-36.html
   My bibliography  Save this article

The new public transport pricing in Madrid Metropolitan Area: A welfare analysis

Author

Listed:
  • Burguillo, Mercedes
  • Romero-Jordán, Desiderio
  • Sanz-Sanz, José Félix

Abstract

In a context of economic crisis, the amount of the demand public transport subsidies in Madrid has been reduced to control the level of public deficit. This has implied a worsening of public service quality and an increase of public transport prices. Using the Spanish Household Survey, this paper analyses the impact on welfare generated by the increase of public transport prices in 2008–2012. For this price and income elasticities have been computed using an LA/AIDS model. Price public transport elasticities are low (around −0.1%) and only significant for the years of the highest price increase. Fuel is substitutive for public transport with a cross-price elasticity of 0.25% and the other goods consumption is almost independent of the consumption of public transport with a cross-price elasticity of 0.06%. The results of income elasticies prove that public transport is a normal good. Results show that this new policy has harmed with a similar impact, low and medium income households. Those households have supported an average loss of welfare of 3.66% of their income. The welfare loss supported by the richest households is 1.5% of their income, which represents only a 40% of the average costs supported by the rest of households.

Suggested Citation

  • Burguillo, Mercedes & Romero-Jordán, Desiderio & Sanz-Sanz, José Félix, 2017. "The new public transport pricing in Madrid Metropolitan Area: A welfare analysis," Research in Transportation Economics, Elsevier, vol. 62(C), pages 25-36.
    • Handle: RePEc:eee:retrec:v:62:y:2017:i:c:p:25-36
    DOI: 10.1016/j.retrec.2017.02.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0739885917300264
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.retrec.2017.02.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Antonio García-Ferrer & Marcos Bujosa & Aránzazu de Juan & Pilar Poncela, 2006. "Demand Forecast and Elasticities Estimation of Public Transport," Journal of Transport Economics and Policy, University of Bath, vol. 40(1), pages 45-67, January.
    2. Sangho Choo & Taihyeong Lee & Patricia L. Mokhtarian, 2007. "Relationships Between US Consumer Expenditures on Communications and Transportation Using Almost Ideal Demand System Modeling: 1984--2002," Transportation Planning and Technology, Taylor & Francis Journals, vol. 30(5), pages 431-453, July.
    3. Jed Friedman & James Levinsohn, 2002. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology," The World Bank Economic Review, World Bank, vol. 16(3), pages 397-423, December.
    4. Hensher, David A., 2008. "Assessing systematic sources of variation in public transport elasticities: Some comparative warnings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(7), pages 1031-1042, August.
    5. Juan Pedro Muñoz Miguel & Clara Simón de Blas & Iciar Carmen Jiménez Barandalla, 2014. "Estudio empírico sobre la utilización del transporte público en la Comunidad de Madrid como factor clave de movilidad sostenible," Cuadernos de Economía - Spanish Journal of Economics and Finance, Asociación Cuadernos de Economía, vol. 37(104), pages 112-124, Agosto.
    6. West, Sarah E. & Williams, R.C.Roberton III, 2004. "Estimates from a consumer demand system: implications for the incidence of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 535-558, May.
    7. Bureau, Benjamin & Glachant, Matthieu, 2011. "Distributional effects of public transport policies in the Paris Region," Transport Policy, Elsevier, vol. 18(5), pages 745-754, September.
    8. Kim Haden, 1990. "The Demand for Cigarettes in Japan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 446-450.
    9. Abdulai, Awudu & Aubert, Dominique, 2004. "A cross-section analysis of household demand for food and nutrients in Tanzania," Agricultural Economics, Blackwell, vol. 31(1), pages 67-79, July.
    10. Tomás Serebrisky & Andrés Gómez‐Lobo & Nicolás Estupiñán & Ramón Muñoz‐Raskin, 2009. "Affordability and Subsidies in Public Urban Transport: What Do We Mean, What Can Be Done?," Transport Reviews, Taylor & Francis Journals, vol. 29(6), pages 715-739, January.
    11. García-Palomares, Juan Carlos, 2010. "Urban sprawl and travel to work: the case of the metropolitan area of Madrid," Journal of Transport Geography, Elsevier, vol. 18(2), pages 197-213.
    12. Javier Asensio & Anna Matas & José-Luis Raymond, 2003. "Redistributive effects of subsidies to urban public transport in Spain," Transport Reviews, Taylor & Francis Journals, vol. 23(4), pages 433-452, July.
    13. Selvanathan, E. A. & Selvanathan, Saroja, 1994. "The demand for transport and communication in the United Kingdom and Australia," Transportation Research Part B: Methodological, Elsevier, vol. 28(1), pages 1-9, February.
    14. Romero-Jordán, Desiderio & del Río, Pablo & Jorge-García, Marta & Burguillo, Mercedes, 2010. "Price and income elasticities of demand for passenger transport fuels in Spain. Implications for public policies," Energy Policy, Elsevier, vol. 38(8), pages 3898-3909, August.
    15. José Manuel Vassallo & Pablo Pérez De Villar & Ramón Muñoz‐Raskin & Tomás Serebrisky, 2008. "Public Transport Funding Policy in Madrid: Is There Room for Improvement?," Transport Reviews, Taylor & Francis Journals, vol. 29(2), pages 261-278, July.
    16. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arranz, José M. & Burguillo, Mercedes & Rubio, Jeniffer, 2022. "Are public transport policies influencing the transport behaviour of older people and economic equity? A case study of the Madrid Region," Research in Transportation Economics, Elsevier, vol. 95(C).
    2. Adnan, Muhammad & Nahmias Biran, Bat-hen & Baburajan, Vishnu & Basak, Kakali & Ben-Akiva, Moshe, 2020. "Examining impacts of time-based pricing strategies in public transportation: A study of Singapore," Transportation Research Part A: Policy and Practice, Elsevier, vol. 140(C), pages 127-141.
    3. Gabriella Vitorino Guimarães & Tálita Floriano Santos & Vicente Aprigliano Fernandes & Jorge Eliécer Córdoba Maquilón & Marcelino Aurélio Vieira da Silva, 2020. "Assessment for the Social Sustainability and Equity under the Perspective of Accessibility to Jobs," Sustainability, MDPI, vol. 12(23), pages 1-23, December.
    4. Arranz, José M. & Burguillo, Mercedes & Rubio, Jennifer, 2019. "Subsidisation of public transport fares for the young: An impact evaluation analysis for the Madrid Metropolitan Area," Transport Policy, Elsevier, vol. 74(C), pages 84-92.
    5. Antonín Pavlíček & František Sudzina, 2020. "Intergroup Comparison of Personalities in the Preferred Pricing of Public Transport in Rush Hours: Data Revisited," Sustainability, MDPI, vol. 12(12), pages 1-9, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Drevs, Florian & Tscheulin, Dieter K. & Lindenmeier, Jörg & Renner, Simone, 2014. "Crowding-in or crowding out: An empirical analysis on the effect of subsidies on individual willingness-to-pay for public transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 250-261.
    2. Arranz, José M. & Burguillo, Mercedes & Rubio, Jennifer, 2019. "Subsidisation of public transport fares for the young: An impact evaluation analysis for the Madrid Metropolitan Area," Transport Policy, Elsevier, vol. 74(C), pages 84-92.
    3. Arabatzis, Garyfallos & Klonaris, Stathis, 2009. "An analysis of Greek wood and wood product imports: Evidence from the linear quadratic aids," Forest Policy and Economics, Elsevier, vol. 11(4), pages 266-270, July.
    4. Cantos-Sánchez, Pedro & Gutiérrez-i-Puigarnau, Eva & Mulalic, Ismir, 2018. "The impact of scrappage programmes on the demand for new vehicles: Evidence from Spain," Research in Transportation Economics, Elsevier, vol. 70(C), pages 83-96.
    5. Korir, Lilian & Rizov, Marian & Ruto, Eric, 2020. "Food security in Kenya: Insights from a household food demand model," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 92, pages 99-108.
    6. Romero-Jordán, Desiderio & del Río, Pablo & Jorge-García, Marta & Burguillo, Mercedes, 2010. "Price and income elasticities of demand for passenger transport fuels in Spain. Implications for public policies," Energy Policy, Elsevier, vol. 38(8), pages 3898-3909, August.
    7. Arranz, José M. & Burguillo, Mercedes & Rubio, Jeniffer, 2022. "Are public transport policies influencing the transport behaviour of older people and economic equity? A case study of the Madrid Region," Research in Transportation Economics, Elsevier, vol. 95(C).
    8. Toner, Jeremy & Wardman, Mark & Shires, Jeremy & Teklu, Fitsum & Hatfield, Andrew, 2020. "Enhancing rail direct demand models with competition between ticket types using contributions from economic theory and market research," Transportation Research Part A: Policy and Practice, Elsevier, vol. 138(C), pages 127-144.
    9. Milioti, Christina P. & Karlaftis, Matthew G., 2014. "Estimating multimodal public transport mode shares in Athens, Greece," Journal of Transport Geography, Elsevier, vol. 34(C), pages 88-95.
    10. Elizabeth Jane Casabianca, 2012. "Distributional effects of preferential and multilateral trade liberalization: the case of Paraguay," FIW Working Paper series 083, FIW.
    11. Nils Ohlendorf & Michael Jakob & Jan Christoph Minx & Carsten Schröder & Jan Christoph Steckel, 2021. "Distributional Impacts of Carbon Pricing: A Meta-Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 1-42, January.
    12. Jacobs, Bas & van der Ploeg, Frederick, 2019. "Redistribution and pollution taxes with non-linear Engel curves," Journal of Environmental Economics and Management, Elsevier, vol. 95(C), pages 198-226.
    13. Pham Van Ha & Hoa Thi Minh Nguyen & Tom Kompas & Tuong Nhu Che & Bui Trinh, 2015. "Rice Production, Trade and the Poor: Regional Effects of Rice Export Policy on Households in Vietnam," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(2), pages 280-307, June.
    14. Oliver, Atara Stephanie, 2013. "Information Technology and Transportation: Substitutes or Complements?," MPRA Paper 46548, University Library of Munich, Germany.
    15. Silvia Tiezzi & Stefano F. Verde, 2017. "The signaling effect of gasoline taxes and its distributional implications," RSCAS Working Papers 2017/06, European University Institute.
    16. Liu, Bing & Hudson, Daren & Devine, Jon, 2022. "A Tariffying Thought: Imposing Tariffs on US Apparel Imports from China," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 23(2), December.
    17. Desiderio Romero-Jordán & José Félix Sanz & Mercedes Burguillo, 2014. "Is it environmentally desirable to encourage public transport through taxes? Evidence for Spanish households," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-9, December.
    18. Lugo, María Ana & Garriga, Santiago & Puig, Jorge, 2022. "Effects of food prices on poverty: The case of Paraguay, a food exporter and a non-fully urbanized country," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 37, pages 7-43, Mayo.
    19. Gilles Quentin Kane & Gwladys Laure Mabah Tene & Jean-Joël Ambagna & Isabelle Piot-Lepetit & Fondo Sikod, 2015. "The impact of food price volatility on consumer welfare in Cameroon," Working Papers hal-02801351, HAL.
    20. Echeverría, Lucía & Molina, José Alberto, 2021. "Poor vs Non-Poor Households in Uruguay: Welfare Differences from Food Price Changes," GLO Discussion Paper Series 890, Global Labor Organization (GLO).

    More about this item

    Keywords

    Public transport; Welfare; Pricing policy; Household; Urban transport; LA/AIDS models;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:retrec:v:62:y:2017:i:c:p:25-36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/620614/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.