The new public transport pricing in Madrid Metropolitan Area: A welfare analysis



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Burguillo, Mercedes and Romero Jordán, Desiderio and Sanz Sanz, José Félix (2017) The new public transport pricing in Madrid Metropolitan Area: A welfare analysis. Research in Transportation Economics, 62 . pp. 25-36. ISSN 0739-8859

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In a context of economic crisis, the amount of the demand public transport subsidies in Madrid has been reduced to control the level of public deficit. This has implied a worsening of public service quality and an increase of public transport prices. Using the Spanish Household Survey, this paper analyses the impact on welfare generated by the increase of public transport prices in 2008e2012. For this price and income elasticities have been computed using an LA/AIDS model. Price public transport elasticities are low (around �0.1%) and only significant for the years of the highest price increase. Fuel is substitutive for public transport with a cross-price elasticity of 0.25% and the other goods consumption is almost independent of the consumption of public transport with a cross-price elasticity of 0.06%. The results of income elasticies prove that public transport is a normal good. Results show that this new policy has harmed with a similar impact, low and medium income households. Those households have supported an average loss of welfare of 3.66% of their income. The welfare loss supported by the richest households is 1.5% of their income, which represents only a 40% of the average costs supported by the rest of households.

Item Type:Article
Uncontrolled Keywords:Public transport; Welfare; Pricing policy; Household; Urban transport; LA/AIDS models.
Subjects:Social sciences > Economics > Public economy
JEL:H20, H71, R21, R28, R48
ID Code:57929
Deposited On:27 Nov 2019 10:10
Last Modified:27 Nov 2019 10:10

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