DEMAND THEORY: ITS APPLICATION TO TRANSIT

The concept of elasticity of demand is discussed and a methodology that would facilitate its practical usage by transit planners is presented. The discussion focuses on fare elasticity which is defined as the proportionate (percentage) change in the demand for transit resulting from a proportionate change in the fare charged by transit. As much, this elasticity indicates the sensitivity of demand to alternative fare levels. The practical solution to estimating fare demand elasticities is illustrated with reference to the bus transit in the San Diego Area. It was noted that as the fare incrased, demand falls off more than proportonately, and revenues fall despite higher prices. It was also found, in general, that the total revenue is maximum at that point where elasticity equals one; this therefore, sets the lower bound on the fare that should be charged.

• Corporate Authors:

  American Public Transit Association

  1100 17th Street, NW
  Washington, DC  United States  20036
• Authors:
  • Vanier, D J
  • Trippi, R D
• Publication Date: 1976-5

Media Info

• Features: Figures; Photos;
• Pagination: p. 35-40
• Serial:
  • Transit Journal
  • Volume: 2
  • Issue Number: 2

Subject/Index Terms

• TRT Terms: Demand; Estimating; Fares; Mechanical elasticity; Prices; Public transit; Revenues; Transportation planning
• Subject Areas: Administration and Management; Finance; Highways; Planning and Forecasting; Public Transportation;

Filing Info

• Accession Number: 00135930
• Record Type: Publication
• Files: TRIS
• Created Date: Sep 21 1981 12:00AM