Travel demand and environmental policyStråle, Jonathan
In a simple theoretical set-up, the “regulator” is only interested in the social cost of carbon, but in a second best world when carbon pricing may be problematic in some sectors (such as international travel) the effects of alternative instruments will depend on the income and price elasticities of the demand for the good, tax effects, potential behavioral effects, and other determinants of demand. Understanding how these factors affect travel demand is therefore of great interest for policy. This thesis consists of three papers that estimate and evaluate the effects of income, taxes, prices and leisure time on the demand for international travel, as well as discuss the policy implications of the estimated results. In Paper I, heterogeneous household level income elasticities of international travel from Sweden are estimated. It is shown that increases in income have a large effect on the demand for international travel, and that this is particularly driven by the households who consume relatively little of the good. In Paper II, the effects of the recent Swedish aviation tax on the demand and price of international air travel from Sweden are estimated. The effects of the tax on the demand for international air travel are large, but no significant price effects can be found at a price index level. Using web-scraped route level price data, a price elasticity is also estimated, and it is shown that the demand effects from the tax are much larger than can be explained by pure price effects from the tax, even when it is assumed that the tax has a full pass-over on the prices of air travel. This indicates behavioral effects of the tax. In Paper III, the effects of increases in leisure time on the demand for leisure travel, and the importance of starting levels of leisure time, are analyzed both theoretically and empirically. It is shown that increases in leisure time have a positive effect on travel demand when the starting amount of leisure that the individual has is low, but that the effects decrease as the starting amount of leisure time increases.
Keywordstravel demand; air travel; income elasticity; price elasticity; tax effects; behavioral effects; leisure time; environmental policy
Published inActa Universitatis Agriculturae Sueciae
2022, number: 2022:24
ISBN: 978-91-7760-923-0, eISBN: 978-91-7760-924-7
Publisher: Swedish University of Agricultural Sciences