Long-Run Elasticity of Demand for Passenger Car Travel with Respect to Highway Tolls and Gasoline Prices for Long Distance Trips

Abstract

Data from the Oklahoma Turnpike Authority provides a 37 year history of quarterly passenger car volumes and tolls on two turnpikes linking the City of Tulsa with the Missouri state line, and the City of Tulsa with the City of Oklahoma City. The two turnpikes are designated Interstate 44 and serve as important links in the national Northeast to Southwest travel corridor. Data on the real price of gasoline, non-agricultural employment, and real personal income covering the same 37 year period allowed isolation of passenger car demand elasticities for tolls and fuel price. From the 2nd quarter of 1973 through the 3rd quarter of 2010, we estimate the elasticity of demand with respect to the real toll to lie in the range -0.1713 to -0.0429 at the 95% confidence level. We estimate the elasticity of demand with respect to the real fuel price to lie in the range -0.0946 to -0.0159 at the 95% confidence level. A dummy variable representing the introduction of electronic tolling in the 1st quarter of 1991 was not significant.

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