Understanding Transport Demands and Elasticities - How Prices and Other Factors Affect Travel Behavior

5 Understanding Transport Demands and Elasticities Victoria Transport Policy Institute Transferability A key factor in this report is the degree to which the transport demand factors and elasticity values it describes are transferable to other times and places. [...] Table 7 Australian Travel Demand Elasticities (Luk and Hepburn 1993) Elasticity Type Short-Run Long-Run Petrol consumption and petrol price -0.12 -0.58 Travel level and petrol price -0.10 Bus demand and fare -0.29 Rail demand and fare -0.35 Mode shift to transit and petrol price +0.07 Mode shift to car and rail fare increase +0.09 Road freight demand and road/rail cost ratio -0.39 -0.80 This table. [...] Glaister and Graham (2002) conclude that the long-run elasticity of vehicle fuel consumption with respect to income is 1.1 to 1.3, and the long-run elasticity of vehicle travel with respect to income is 1.1 to 1.8, with lower short-run values. [...] 26 Understanding Transport Demands and Elasticities Victoria Transport Policy Institute Fuel Consumption With Respect to Fuel Price Fuel price increases tend to cause fuel consumption to decline, in the short-term by reducing total vehicle mileage and traffic speeds, and shifting travel to more fuel-efficient vehicles in multi-vehicle households, and in the long-term by increasing vehicle fuel eco. [...] data, Agras and Chapman (1999) find short-run fuel price elasticities of - 0.15 for vehicle mileage and 0.12 for fuel economy, summing to an overall short-run gasoline price elasticity of –0.25, and long-run elasticities of –0.32 for vehicle travel and 0.60 for fuel economy, summing to –0.92 in the long run.