Working Paper: NBER ID: w31629
Authors: Robert W. Hahn; Robert D. Metcalfe; Eddy Tam
Abstract: We develop novel estimates of peak and off-peak price elasticities for urban mass transit demand in San Francisco using a large natural experiment with 3.6 million trip sessions and a natural field experiment that both have exogenous price subsidies. We then estimate the welfare impacts for these price subsidies using a sufficient statistics approach. Our analysis suggests that off-peak subsidies can increase welfare, but the positive effects are reduced when consumers take the decisions of others into account compared to when they do not. We also find a large variation in the welfare impacts of shifting travel to different periods, which is explained by differences in demand and congestion characteristics. Finally, we show that the targeting of subsidies can increase welfare, but need not do so if the regulator does not have accurate information on demand.
Keywords: No keywords provided
JEL Codes: H20; R41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| off-peak subsidies (L97) | increase welfare (I38) |
| consideration of others' decisions (D70) | decrease effect of off-peak subsidies on welfare (H23) |
| subsidies (H20) | shift demand from peak to off-peak periods (L97) |
| subsidies (H20) | marginal value of public funds (MVPF) (H49) |
| targeting subsidies (H23) | enhance welfare (I30) |
| lack of comprehensive information on demand characteristics (D83) | decrease effectiveness of subsidy targeting (H23) |