Spatiotemporal Changes of Traffic Demand Price Elasticities in Japan Throughout 2008

Abstract

This study attempts to examine spatiotemporal changes of traffic demand elasticities regarding gasoline prices and economic conditions and focusing on the substantial fluctuations that occurred throughout 2008 in Japan. This research is aimed at a better understanding of the spatial and temporal instability of the elasticities and possible reasons for changes in the elasticities. First, a random coefficient model is built to represent spatial heterogeneity in the elasticities and is estimated by using a hierarchical Bayesian method. Next, a sequential Bayesian updating method is applied to examine monthly changes in the elasticities. The data used in the empirical analysis were monthly traffic volume data collected on 53 expressways. The results showed that although the monthly changes in the average elasticities over all routes were mainly observed before August 2008, different directions of change across routes were observed after September 2008, when gasoline prices began to fall. The results also indicated that responses to gasoline price changes might be dependent on the causes of price changes. Furthermore, on urban expressways, it was found that once a reduction in traffic demand was attained because of rising gasoline prices, the demand did not fully recover even after the actual prices fell again to the original level.