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A survey of recent estimates of price elasticities of demand for transport

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Listed:
  • Tae H. Oum
  • Waters, W.G.
  • Jong Say Yong

Abstract

This paper reviews 70 estimates of the price elasticity of demand for many different transport modes and market situations. The paper presents figures separately for passenger and freight transport and include estimates of both own-price and mode choice elasticities. It also presents some elasticity estimates on demand for gasoline, together with selected cross-price elasticities. In addition, it includes a brief exposition on the different concepts of elasticity - compensated, uncompensated, price, cross-price and mode choice - and discusses the relations between them. This paper shows that, since transportation is a derived demand, it tends to be inelastic. Although the review is confined to estimates of price elasticities, it notes that quality variables are often more important than price, particularly in the air, motor freight, and container markets. Finally, most of the estimates relate to developed countries, reflecting the availabilty of data, research resources, and domicile of the researchers. The elasticity estimates are nevertheless thought to be relevant to developing countries as well. But since intermodal competition is generally less intense in developing countries, this tends to make transport demand more inelastic, although the lower income levels in such countries may partly offset this effect.

Suggested Citation

  • Tae H. Oum & Waters, W.G. & Jong Say Yong, 1990. "A survey of recent estimates of price elasticities of demand for transport," Policy Research Working Paper Series 359, The World Bank.
    • Handle: RePEc:wbk:wbrwps:359
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    References listed on IDEAS

    as
    1. Anderson, James E & Kraus, Marvin, 1981. "Quality of Service and the Demand for Air Travel," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 533-540, November.
    2. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    3. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    4. Friedlaender, Ann F & Spady, Richard H, 1980. "A Derived Demand Function for Freight Transportation," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 432-441, August.
    5. Tae Hoon Oum, 1979. "A Cross Sectional Study of Freight Transport Demand and Rail-Truck Competition in Canada," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 463-482, Autumn.
    6. Tae Hoon Oum, 1979. "A Warning on the Use of Linear Logit Models in Transport Mode Choice Studies," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 374-388, Spring.
    7. Blum, U.C.H. & Foos, G. & Gaudry, M.J.I., 1986. "Aggregate Time Series Gasoline Demand Models. Review of the Literature and New Evidence for West Germany," Cahiers de recherche 8617, Universite de Montreal, Departement de sciences economiques.
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