DEMAND ELASTICITY FOR LOCAL PUBLIC TRANSPORT IN POLISH CITIES: DO LOCAL POLICIES MATTER?

• Author: Swianiewicz, Pawet

1. Introduction

   The development of individual motorization combined with cultural changes has led to a decrease in the level of public transport services in cities in different countries, including Poland. According to Dargay and Hanly (2002), the average decrease in the number of passengers carried by public transport in British municipalities was 20% in 1986-1996. This phenomenon had numerous negative side effects. Excessive concentration of private transport resulted in traffic jams, inconvenience due to scarcity of parking spaces, reduced attractiveness of cities for pedestrians, excessive noise and increased air pollution, which was dangerous not only in terms of immediate consequences for residents but also in terms of the negative impact on global climate change.

   There is therefore a need to develop urban policies that increase the attractiveness of urban public transport. The question arises as to why it has been possible to stop the trend of the decrease in the number of passengers in some cities, while in others the negative trend continues. Is it determined by the policies implemented by local authorities and, if so, which of them are likely to be the most effective? Or is the social context related to the characteristics of individual cities predominant? We try to answer these questions in this article, which goal is to find factors that determine the elasticity of demand for urban public transport services.

   The article consists of five parts, beside the current introduction. In the second section, we discuss the theoretical framework based on the results of previous research. In the third one we formulate hypotheses, while the fourth section focuses on the presentation of data sources and empirical strategy. The fifth part presents mostly in a descriptive manner--general changes in the use of local public transport in Polish cities in recent years and the sixth part includes hypothesis testing. Finally, the seventh section is a discussion of the results of the empirical tests conducted and conclusions.

2. The factors affecting demand for local public transport in the light of past research

   Given the high and growing political relevance of the topic in recent years, empirical studies of demand determinants in urban public transport are surprisingly scarce. This statement definitely applies to Poland, where the existing studies are either a discussion of research conducted in other countries or model considerations based on theoretical concepts, but poorly supported by methodologically solid data analysis (Bakowski, 2014; Dydkowski et al., 2018). However, available empirical tests are not very numerous in the international academic literature either. Holmgren (2007) points out that until the end of the 20th century, price elasticity studies dominated, while relatively recently there have been more studies analyzing other factors of elasticity of demand for local public transport.

   One of the most frequently asked questions is that of the effectiveness of different types of urban policies. The focus is, therefore, on estimating the demand function by determining its elasticity in relation to various explanatory variables.

   The level of demand may be affected by two types of variables (Brechan, 2017). The first refers to the organization of transport itself and can, therefore, be shaped to some extent by urban policy. The two most important factors highlighted in previous studies are the quality of service and price. The former is measured in a variety of ways. In a study of the Madrid region, Matas (2004) uses the variable of the length of all courses. Its high value may indicate both a satisfactory coverage of the area by a transport network (network density) and a high frequency of travel by means of transport, which is one of the main demands made by passengers in relation to urban transport (Hebel, 2014). In his study, Matas also tests average speed, average frequency and the number of kilometers travelled. The latter variable is also used by Dargay and Hanly (2002), Romilly (2001) and Bresson et al. (2003), referring it to the population of the city examined. In turn, Daldoul et al. (2016) and Deb and Filippini (2013) define the quality of service as the density of the communication network.

   Romilly (2001), on the other hand, also uses a variable concerning the age structure of rolling stock (bus fleet). According to available tests, the quality of communications --though measured differently--is positively correlated with demand. Often (e.g. Matas, 2004) it is the most powerful independent variable. Some studies show that quality (in this case measured by the frequency of travel) has a stronger impact on passenger numbers than a reduction in ticket prices (Brechan, 2017). Holmgren (2007) also concludes that the availability of a service (measured in terms of vehicle-kilometers) has the greatest impact on demand--higher than price and other variables he considers in his study. However, Holmgren (2013) notices a methodological problem related to the study of the impact of the quality of services measured by the frequency of operation as his variable, as well as some others included in various studies, is not fully exogenic; for example, the frequency of operation of city buses depends also on past demand, so it cannot be treated exclusively as a variable related to urban policies. As Holmgren (2013) states: 'there are good reasons to believe that although quality of service certainly affects demand, the level of demand also affects the level of service (...). Despite this, the most common practice in statistical/econometric applications is to assume that quality causes demand and not the other way around' (p. 102).

   Our model is based on a similar assumption; however, the direction of the causal relationship may influence the policy implications stemming from the study to a very limited extent only.

   Several studies indicate the elasticity of demand in terms of price: the higher the ticket price, the fewer passengers are carried. According to Dydkowski et al. (2018) price elasticity of demand in urban transport in Poland is low (-0.38) and is associated with a low level of fares. But Holmgren (2007) identifies even higher price elasticity (although lower than the elasticity with respect to service quality), additionally pointing to differences between different parts of the world. Above a certain threshold the price elasticity of demand is increasing (Dargay and Hanly, 2002). Alternative costs (time value, cost of nuisance) should also be considered in order to take full account of the demand response to the factor in question. In empirical studies, they are expressed as costs associated with owning and using a car. Matas (2004) and Holmgren (2017) use the petrol price index here, while Dargay and Hanly (2002) as well as Romilly (2001) use more general automotive costs that reflect both car purchase and day-to-day maintenance costs. Increasing these costs may be one of the ways of influencing the demand for public transport (Bakowski, 2014). The instruments available to city authorities in this respect include, for example, the policy on the number and cost of parking spaces as well as charges for entering the city center.

   The second group of factors is related to the environment in which the urban transport company operates, i.e. the economic situation of the city and the socio-demographic status of residents. Holmgren (2007), in his meta-analysis of earlier studies, considers the income of residents, the price of fuel (affecting the cost of alternative transport) and the number of private cars. In a study of the Madrid region, Matas (2004) indicates that the growing level of suburbanization (expressed in the suburban population in relation to the total population of the region) has a positive impact on the demand for urban transport services. Some studies also point to the economic activity of the society in question, especially commuting to work (Matas, 2004; Deb and Filippini, 2013; Daldoul et al., 2016). As regards the characteristics of the demographic and social structure, Dargay and Hanly (2002) study the impact of the increase in the number of pensioners: they assume that seniors, due to a greater amount of free time, use public transport services more often. Daldoul et al. (2016), in a study of Tunisian public transport, test the impact of feminization. Recalling the results of previous studies (De Palma and Lindsey, 2001), they suggest that time is of greater value to men, which can be justified by the statistically higher salaries of men (so the cost of the per hour labor force is higher). They assume, therefore, that the demand for public transport should increase with a higher number of women in the population (public transport is more time consuming), but their empirical test did not confirm this relationship.

   The wealth of the population is a very good example that demonstrates how the direction of dependency can vary in different local (cultural) contexts. Higher incomes may limit the demand for public transport, but the relationship may also be positive: the increased wealth of the population may result in more users of public transport services. In a study on India, Deb and Filippini (2013) consider the literacy rate, which is positively correlated with the wealth of the population. They refer to Dargay and Hanly's (2002) thesis that describes public transport as an inferior good, for which demand decreases along with an improvement in the material condition of the population. However, a situation in which the increase in income is accompanied by an increase in demand for passenger transport services may occur in large cities, where the quality of urban transport is high. At that time, it is treated as a substitute for a car, the possession of which is not significantly sensitive to changes in the financial situation of the population (Asensio et al., 2003 apud Matas...