Inter-urban rail demand, elasticities and competition in Great Britain: Evidence from direct demand models

The aim of this research was to extend direct demand models to analyse elasticity variation in more detail, and in particular to examine the interaction between rail and competing modes. Relatively little is known about the interaction between modes in the inter-urban travel market. We have obtained plausible, precise and reliable estimates of elasticity variation with regard to both the level a variable takes and with respect to the degree of competition from car and coach. These relationships have been freely estimated rather than imposed and would in many instances imply appreciable differences in demand forecasts in comparison with models which do not include competitive effects. As a result of this research, British Rail has amended its forecasting procedures to include competitive effects. We recommend the more widespread use of direct demand models to examine elasticity variation.