2013•RePEc: Research Papers in EconomicsOpen access

Price elasticity of demand for toll roads in Chile

Rodrigo Saens, Germán Lobos

Abstract

The efficiency of a road pricing scheme to optimize the use of transport infrastructure depends on the available information regarding the price elasticity of demand for bridges, tunnels and highways. The aim of this paper is to estimate the price elasticity of demand for toll roads in Chile using the seemingly unrelated regressions (SUR) method and a panel of 48 monthly data drawn from 21 toll plazas (48 x 21). Our results show that, even when controlling for gasoline prices and economic activity, the demand for road use is very price inelastic, with values ranging from -0.17 for cars and -0.05 for trucks.

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Key concepts: Toll, Price elasticity of demand, Truck, Elasticity (physics), Economics, Panel data, Microeconomics, Demand curve