Estimating the price elasticity of demand for urban mass rapid transit ridership: A quasi-experimental evidence from Jakarta, Indonesia

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Abstract

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.

Original languageEnglish
Pages (from-to)354-364
Number of pages11
JournalCase Studies on Transport Policy
Volume10
Issue number1
DOIs
Publication statusPublished - Mar 2022

Keywords

  • Fare elasticity
  • Indonesia
  • MRT
  • Regression discontinuity design in time

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