Empirical Analysis of Long-Run Elasticities and Asymmetric Effects of Transit Demand Determinants

The effects of transit ridership determinants can be quantified as demand elasticities which are often used to inform transit planning and policy making. This study seeks to determine the impacts of transit service supply, fare, and gas prices on ridership by quantifying the short-run and long-run demand elasticities, as well as test whether transit ridership exhibits an asymmetric response to the rise and fall of these factors using a panel data of 99 Canadian transit agencies over the period of 2002–2016. The results of the dynamic panel model show the effects of transit service and fare to be greater in the long run. The short-run fare elasticity was found to be –0.24 while the long-run elasticity was –1.1. Furthermore, the demand elasticity with respect to service levels was also found to be inelastic (0.28) in the short run but elastic (1.3) in the long run. The cross-elasticity of gas prices was estimated to be 0.17. The existence of asymmetry was analyzed using decomposition techniques to separately estimate the coefficients for the rise and fall in each of the determinants. The equality of these coefficients was tested against each other and it was found that ridership responded more to an increase in transit supply than a decrease. The importance of these results to policy making are then discussed.