The Role of Fare and Gasoline Price Shocks on the Behavioral Response of Passengers in Tehran Metropolitan for Using Public Transportation (Metro, BRT, and Bus)

Introduction:

 Public transportation is considered one of the main requirements for economic growth and the sustainable development of cities. Lack of appropriate public transportation infrastructure can cause various socio-economic issues, including congestion, waste of time and fuel, intensive air pollution and the emission of greenhouse gasses, high urban density, and environmental degradation. The use of the public transportation system can be affected by various policies inside or outside the system. The ability to predict the fluctuations of the urban public transportation system due to internal and external shocks of the public transportation system is one of the most basic requirements for appropriate policymaking in response to sudden fluctuations, especially in the Tehran metropolitan. One of the main issues that put pressure on urban public transportation systems is their significant effectiveness in the fluctuations of gasoline prices and fares in big cities. Gasoline price fluctuations can change people’s behavior in the substitution between private car use and public transportation system. On the other hand, fare changes can affect the demand for various public transportation vehicles like buses, metro, and BRT in Tehran as well. Despite the considerable importance of gasoline prices and fares on public transportation and the behavior of passengers in choosing between various transportation modes, no study has investigated the mentioned relationship and the response of public transportation passengers with respect to fuel price and fares. Therefore, the purpose of the current study was to evaluate the role of fare and gasoline price shocks on the behavioral response of passengers in the Tehran metropolitan using the Global Vector Autoregressive (GVAR) approach.

The main objective of this study was to investigate the role of gas price and fare shocks on the behavioral response of passengers in the Tehran metropolitan using public transportation (metro, BRT, and bus) during the period of 2007-2018 using monthly data and Global Vector Autoregressive (GVAR) models. The Global Vector Autoregressive Model (GVAR) model is one of the popular approaches to evaluating the relationships between economic entities. Compared to the traditional Vector Autoregressive (VAR) approach, it provides a universal and practical modeling framework to perform quantitative analyzes on the relative importance of different impulses and various channels for the transmission mechanism of the shocks. In this context, this method includes a compact econometric framework that is specifically designed to explicitly model the interdependence between the various variables that enter the model. In particular, the structure of the GVAR model combines individual error correction models in such a way that it is possible to relate the internal variables related to an economic unit in the model to the corresponding external variables in another economic unit j (i≠j). In this case, it is possible to check and determine the desired pattern of economic units in a much more precise way. Individual models are linked together using a weight matrix; finally, the GVAR model can be solved for all units. In other words, the GVAR approach represents a method that is used to check the degree of interdependence between model variables through the analysis of the impulse response function.

This study attempted to answer two main questions about the occurrence of two shocks, including gasoline price and fare shocks, on the behavioral response of passengers in Tehran metropolitan to various public transportation modes. The first question stated that what is the consequence of a positive gasoline price shock on the demand for various modes of public transport (metro, BRT, and bus) in the Tehran metropolitan? In response to this question, the estimation results of the GVAR model indicated that when a positive shock in the price of gasoline happens, an increase in passenger demand for all three types of public transportation happens. The occurrence of a positive shock in the price of gasoline, metro, BRT, and bus passengers will increase. In other words, when a positive shock occurs in the price of gasoline, it causes people to use public transportation instead of private cars, and they will be more willing to use public transportation. This issue makes the policymakers in the public transportation system make the necessary arrangements to increase the carrying capacity when planning to respond to the fluctuations caused by the gasoline price shock and consider proper arrangements to divide this demand among all types of public transportation. The second question of this research was what effect does the occurrence of a positive shock in the fare price of each type of public transportation (metro, BRT, and bus) have on the demand for other public transportation in the Tehran metropolis? In response to this question, positive shocks on fares on all types of public transportation in the Tehran metropolis were investigated. The results of the study showed that when a positive shock in the metro fare occurs, the demand for metro passengers will be constant until the 20th month, and this indicated that part of the passengers’ demand for the metro is independent of the fare and demand for bus and metro will be decreasing. Moreover, by the occurrence of a positive shock in bus fares, the demand for bus passengers will decrease, and the excess demand will transmit to other modes like metro and BRT. This leads to the simultaneous increase in passengers of both transportation modes. In other words, by the occurrence of a positive shock in bus fares, the passengers would replace the metro and BRT as alternatives to the buses. Besides, from the eight months onwards, when a positive shock happens in BRT fares, the demand for the metro will increase while the demand for buses increases slightly. This result states that a part of the demand for BRT will transmit to the metro and bus as alternatives. In this circumstance, metro and bus will be replaced with BRT; however, a part of the BRT passengers will not change their choices, and the demand will increase from the fourth month onwards. Finally, it can be stated that the occurrence of positive shocks in metro fares will decrease the BRT and bus passengers, while a positive shock in BRT fares would increase the demand for metro, and the demand for BRT and bus will increase with a flatter slope.

The results of this study can have important implications for policymaking during the occurrence of shocks in demand for intra-city public transport in Tehran. Based on the results of the study, it is suggested that policymakers think of the necessary predictions to create the appropriate capacity to meet the demand fluctuations in urban public transportation in response to the internal and external shocks of the transportation system. In addition, when setting fares for any public transportation, the relevant authorities must consider the interdependence between demand and fares for other public transportation. Also, the price shock of gasoline and the upward trend of passengers using all three types of public transportation means that the increase and expansion of subway lines, BRT, and the renovation of the bus system in all areas of Tehran will be among the most important policy suggestions for the public transportation system in Tehran. Finally, it is suggested to the policymakers and planners in the public transportation system of the Tehran metropolitan to set up a real-time passenger monitoring system for all types of urban public transportation vehicles so that they can be aware of the occurrence of sudden fluctuations in the transportation system.