Working Paper: NBER ID: w28244
Authors: Lucas W. Davis
Abstract: This paper uses fare changes in Mexico City, Guadalajara, and Monterrey to estimate the price elasticity of demand for urban rail transit. In two of the cases there is a significant fare increase (30%+), and in the third there is a 60-day fare holiday. Ridership responds sharply in the expected direction in all three cities, implying price elasticities which range across cities from -.23 to -.32. In addition, there is suggestive evidence that the temporary fare holiday led to a higher baseline level of ridership. These estimates are directly relevant for policymakers considering alternative pricing structures for urban rail. The paper discusses the relevant economic considerations and then shows how the estimated elasticities can be used to perform policy counterfactuals.
Keywords: No keywords provided
JEL Codes: H23; Q53; R41; R42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fare increase (Mexico City) (R48) | decreased ridership (Mexico City) (R48) |
| fare increase (Guadalajara) (R48) | decreased ridership (Guadalajara) (R48) |
| fare holiday (Monterrey) (Z39) | increased ridership (Monterrey) (R48) |
| decreased ridership (Mexico City) (R48) | implied price elasticity (Mexico City) (R48) |
| decreased ridership (Guadalajara) (R48) | implied price elasticity (Guadalajara) (C13) |
| increased ridership (Monterrey) (R48) | implied price elasticity (Monterrey) (D43) |
| fare holiday (Monterrey) (Z39) | higher baseline ridership (post-holiday) (L90) |