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

Putri Cahaya Sianturi; Rus'an Nasrudin; Muhammad Halley Yudhistira

doi:10.1016/j.cstp.2021.12.015

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

Putri Cahaya Sianturi, Rus'an Nasrudin, Muhammad Halley Yudhistira

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

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 language	English
Pages (from-to)	354-364
Number of pages	11
Journal	Case Studies on Transport Policy
Volume	10
Issue number	1
DOIs	https://doi.org/10.1016/j.cstp.2021.12.015
Publication status	Published - Mar 2022

Keywords

Fare elasticity
Indonesia
MRT
Regression discontinuity design in time

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.cstp.2021.12.015

Cite this

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

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.",

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N2 - 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.

AB - 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.

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

Abstract

Keywords

UN SDGs

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