Measuring Long-Run Price Elasticities in Urban Travel Demand

64 Pages Posted: 9 Dec 2018 Last revised: 20 Feb 2019

See all articles by Javier D. Donna

Javier D. Donna

Assistant Professor of Economics

Date Written: November 5, 2018


This paper develops a structural model of urban travel to estimate long-run price elasticities. A dynamic discrete choice demand model with switching costs is estimated, using a panel dataset with public market-level data on automobile and public transit use for Chicago. The estimated model shows that long-run own- (automobile) and cross- (transit) price elasticities are more elastic than short-run elasticities, and that elasticity estimates from static and myopic models are downward biased. The estimated model is used to evaluate the response to a gasoline tax. Static and myopic models mismeasure long-run substitution patterns, and could lead to incorrect policy decisions.

Keywords: Long-run price elasticities, Dynamic demand travel, Hysteresis

JEL Classification: L71, L91, L98

Suggested Citation

Donna, Javier D., Measuring Long-Run Price Elasticities in Urban Travel Demand (November 5, 2018). Available at SSRN: or

Javier D. Donna (Contact Author)

Assistant Professor of Economics

University of Florida
Department of Economics
Gainesville, FL 32606
United States


Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics