Influence of price and income on rail travel in Ireland

Abstract

There are many factors that influence demand for rail travel, including rail and road travel time, ticket costs, fuel costs and income. This paper empirically examines the influence of per capita GDP and rail fares on intercity rail journeys using cointegration and error correction techniques. The price and income elasticity of demand for rail-passenger transport is estimated. The findings of this study are that rail passenger demand is elastic with price in the long term, having a value of −1·08, but it is inelastic with income in both the long and short run. The study recommends that reducing intercity rail fares could be one of the tools used to increase the demand for intercity rail passenger transport. That is, reducing the ticket price by 1% will increase the per capita number of journeys by intercity rail by slightly more than 1% in the long term. However, the authors point out that additional research is required to examine the impacts of other factors on railway demand, such as travel times, GDP and cross-price elasticities.