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Modeling Technique

In this step, a theoretical model to predict how a policy change or program affects travel behavior in terms of trip change behavior is first identified. The objective is to develop a framework of analysis that can predict the effects on travel decision of diverse and often concurrent TDM strategies. The model predicts changes in the number of mode trips brought about by specific programs or policies.

The approach follows the principles governing the law of demand for market goods and is based on price elasticities. Economists have long used the concept of elasticity to describe how individuals react to price changes. The law of demand shows that, in the aggregate, as the price of a good increases its demand declines. This also applies to the demand for transportation goods and services, where prices can take many forms, monetary, such as the cost of using a given mode, and non monetary, such as the perceived cost of time. For example, changes in the cost of travel can affect the number of trips undertaken, the choice of travel time and the choice of mode. The elasticity of

demand measures how changes in the price of purchased and consumption of that good. demanded changes in response to a percentage competing or complementary goods)[27].

a good will lead to changes in the quantity The elasticity records how the quantity change in its price (and also in the price of

As detailed in this section, the proposed framework allows capturing a broader range of trade-offs that users constantly face and is capable of quantifying impacts on travel patterns by using prices as the direct drivers of travel demand. Furthermore, the approach is able to take into account how individuals re-adjust over time in their trade-offs.

Constant Elasticity Demand for Trips

The following example is designed to provide a better understanding of the relationship between price and travel time elasticities and how these relate to travel behavior. Two basic assumptions, which will be relaxed once the model is fully developed and applied in the next section of the report, are made, namely: 8

  • There are two modes, auto and transit; and,

  • The major cost drivers are represented by fuel cost and travel times.

Let us assume the following travel demand function:

j i T i P i j i i i T T A P d , ε T ε ε =



8 During the spreadsheet design phase, described in the next section of the report, the model is expanded to include more than two modes, additional modal cost drivers, such as transit fare, waiting time, parking costs, and other variable vehicle operating costs.


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