A demand model for domestic air travel in Sweden
The aim of this study is to estimate the price elasticity of demand for domestic air travel in Sweden. Using national aggregated data on passenger quantities and fares, price elasticities of demand are estimated with an unbalanced, in terms of stationarity, yet well performing model. The analysis also includes estimates of cross-price elasticities for the main transport substitutes to air travel, rail and road. The robustness of the results is enforced by a primitive division of business and leisure travellers. The results indicate that aggregated demand flr domestic air travel in Sweden is fairly elastic (-0.84) in the short-run and more elastic (-1.13) in the long-run. The robustness test of the model show that leisere travellers, as defined in the data, are more sensitive to price changes than are business travellers. Furthermore, the cross price elasticity between rail and air travel is found to be 0.44.
|Date of creation:||02 Nov 2011|
|Contact details of provider:|| Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden|
Web page: http://www.cts.kth.se/
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pagan, Adrian R & Wickens, M R, 1989. "A Survey of Some Recent Econometric Methods," Economic Journal, Royal Economic Society, vol. 99(398), pages 962-1025, December.
- Hodrick, Robert J & Prescott, Edward C, 1997.
"Postwar U.S. Business Cycles: An Empirical Investigation,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 29(1), pages 1-16, February.
- Robert J. Hodrick & Edward Prescott, 1981. "Post-War U.S. Business Cycles: An Empirical Investigation," Discussion Papers 451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Mason, Keith J., 2005. "Observations of fundamental changes in the demand for aviation services," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 19-25.
- Brons, Martijn & Pels, Eric & Nijkamp, Peter & Rietveld, Piet, 2002. "Price elasticities of demand for passenger air travel: a meta-analysis," Journal of Air Transport Management, Elsevier, vol. 8(3), pages 165-175.
- John Baffes, 1997. "Explaining stationary variables with non-stationary regressors," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 69-75. Full references (including those not matched with items on IDEAS)