Working Paper: NBER ID: w31330
Authors: Peter Christensen; Adam Osman
Abstract: Optimal transportation policies depend on demand elasticities that interact across modes and vary across the population, but understanding how and why these elasticities vary has been an empirical challenge. Using an experiment with Uber in Egypt, we randomly assign large price discounts for transport services over a 3 month period to examine: (1) the demand for ride-hailing services, (2) the demand for total mobility (km/week), and (3) its contributions to external costs (e.g. congestion). A 50% discount more than quadruples Uber usage and induces an increase of nearly 49% in total mobility. These effects are stronger for women, who are less mobile at baseline and perceive public transit as unsafe. Technology-induced reductions in the price of ride-hailing services could generate substantial benefits to users (4.3% of GDP) that would be accompanied by considerable increases in external costs (1% of GDP), with benefits accruing to the most affluent and costs being borne by the entire population.
Keywords: ride-hailing; mobility; external costs; randomized controlled trial
JEL Codes: Q5; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 50% discount (H43) | Uber usage (L92) |
| 50% discount (H43) | total mobility (J62) |
| 50% discount (H43) | private vehicle kilometers traveled (R48) |
| 50% discount (H43) | price elasticity of demand for mobility among women (J69) |
| 50% discount (H43) | price elasticity of demand for mobility among men (J60) |
| price reductions (L42) | benefits equating to 43% of Cairo's GDP (O22) |
| price reductions (L42) | external costs increase by 10% of GDP (F69) |