Information Technology and Transportation: Substitutes or Complements?

The increased prevalence of Information and Communications Technology (ICT) provides opportunities to substitute ICT for transportation. However, ICT can also be a complement for transportation, and prior research on the effect of ICT on travel for specific purposes has shown mixed results. Therefore, I examined the relationship between ICT and transportation on a larger scale, using a modified Quadratic Almost Ideal Demand System (QUAIDS) model to calculate expenditure and price elasticities for several categories of ICT and transportation goods. Among other results, I found that cellular service was a complement for private transportation, while home Internet service had no effect.