Passenger Rail Transport: Demand and Quality in a European Panel

A panel of passenger rail data from 14 countries over 24 years is used to estimate a rail demand function for the first time at this level of aggregation. The data set includes quality variables that proxy the generalised time costs found to be important in micro studies. Robust estimates of the rail demand equation indicate much larger short and long run service quality elasticities than those for fares or cross-price elasticities, a ranking which is in agreement with estimates using highly disaggregated data. The overriding importance of service quality for stemming the declining modal shares of passenger rail transport in most countries is thus confirmed at the aggregate level.