This study estimated the price elasticity of demand for newly opened mass rapid transit in Jakarta. We exploited a tariff change event in mid-May 2019 using the Regression Discontinuity in Time (RDiT) framework with a high intensity data. The preferred estimate showed that the event reduced the ridership by 7.4 per cent, implying price inelastic demand to a 100 per cent price increase. The estimates suggest a substantial variation within a day. The demand in the off-peak is more sensitive than in the peak period. Our results justify the necessity of supply-side expansion to promote more ridership and the need for peak-load pricing in pricing strategy.
- Fare elasticity
- Regression discontinuity design in time