Estimating the Demand Elasticities of Passenger and Cargo in I.R.I. Railways

Authors

1 Department of Economics, Tarbiat Modares University, Tehran, Iran

2 Department of Economics, Tarbiat Modares University, Tehran, Iran</P>

Abstract

Informing of demand elasticity not only increases the decision-making and selection power of service providers but also addresses the ability of supplier flexibility (including rail service supplier) vis-à-vis material providers. If Railway organization has information on the effect of main factors in the final rail service demand and their elasticities, it will have proper contexts of decision-making about infrastructure and access pricing. In this paper, it is tried to review the studies on passenger and cargo demand elasticities in different countries and estimate various models for rail transport demand. In these models, passenger and cargo demand are functions of price (fare), the price of alternative mode of transport, population, production volume and sectoral value-added and so on. The estimated elasticity values are compatible with similar studies to high extent. They indicate inelastic (non-sensitivity of quantity to price) rail travel demand with respect to fare, distance and population and substitutability with bus travel. Also, the demand for cargo transit by train is inelastic to distance. In other words, the demanded quantity of cargo is almost constant with relative to distance.

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