Skip to main content
Article
An empirical analysis of the determinants of passenger rail demand in Melbourne, Australia
Economic Analysis and Policy
  • Albert Wijeweera, Southern Cross University
  • Michael B Charles, Southern Cross University
Document Type
Article
Publication Date
1-1-2013
Peer Reviewed
Peer-Reviewed
Abstract

Considerable yet largely unexpected growth in passenger rail demand has occurred recently in Australian capital cities. This article uses historical data, together with modern time series methods, to examine empirically the factors that might have contributed to growth in passenger rail demand in Melbourne, Australia, and to gain greater insight into the relationships between the various explanatory variables. A cointegration approach is used to estimate the long-run rail elasticities, while an error correction model is used to estimate short-run elasticities. The study finds that the short – run rail elasticity is twice as low as the long-run elasticity, although both are highly inelastic. The inelastic nature of the demand suggests that a fare increase would not lead to a significant drop in boardings, and hence results in a rise in total revenue. In addition to the fare, city population, petrol price and passenger income exert a positive impact on passenger rail demand.

Disciplines
Citation Information

Wijeweera, A & Charles, M 2013, 'An empirical analysis of the determinants of passenger rail demand in Melbourne, Australia', Economic Analysis and Policy, vol. 43, no. 3, pp. 249-264.