Luis A.

Guzmán\Carlos Moncada\Santiago Gomez 1

Fare elasticities in BRT systems: the case of Bogotá

First and corresponding author: Luis A. Guzman

5 Affiliation: Ph.D Researcher/Professor
Grupo de Estudios en Sostenibilidad Urbana y Regional, Universidad de los Andes
Address: Carrera 1 Este No. 19A-40, Edificio Mario Laserna
Bogotá, Colombia
Phone: 57 339 49 49
10 Fax:
e-mail: la.guzman@uniandes.edu.co

Second author: Carlos Alberto Moncada Aristizábal

15 Affiliation: Assistant Professor
Departamento de Ingeniería Civil y Agrícola- Universidad Nacional de Colombia
Address: Ciudad Universitaria Edificio 214 Of 417
Bogotá, Colombia
Phone: +57 1 3165328
20 Fax: +57 1 3165328
e-mail: camoncadaa@unal.edu.co

Third author: Santiago Gomez Cardona

25 Affiliation: PhD Student in economics
Facultad de Economía, Universidad de los Andes
Address: Calle 19A No 1-37 Este. Bloque W
Bogotá, Colombia
Phone: +57 339 49 49 ext 2429
30 Fax: +57 332 44 92
e-mail: s.gomez15@uniandes.edu.co

35 Submission date: August 1th 2016

Number of words: 5,161 + 2 tables × (250) + 5 figures × (250) = 6,911 word-equivalents

40
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 2

45 ABSTRACT

Fare elasticities of travel demand for public transport should be a key determinant in evaluating
the impact of changes in fares on ridership at different levels. In the case of Transmilenio (BRT of
Bogotá), where the travel demand grows constantly and there are few fare changes, there could be
50 problems of collinearity. To overcome this barrier, an econometric-panel data model from aggregated
information, was used for the estimations. We used information related with user entrances to the
Transmilenio stations between 2001 and 2012 for the phases 1 and 2 of the system. The database contains
more than 588,000 observations identified by day and station. Monthly information on other factors
which may influence ridership, like fuel prices and regular bus fares were also included.
55
The objective of this study is to provide a set of short-term elasticities estimates for
Transmilenio’s fares measured in different time windows after the introduction of a change, during the
day and for two-income levels. The results show a variation as time passes. After the introduction of a
fare change, and as we increase the time window to measure the effect, the elasticities absolute values
60 decrease (approaching zero) from -0.45 (very short time, one week) to -0.15 after two months. Besides,
the low-income people are more sensitive to these types of policies as it was expected. This result should
inform decision makers in Bogotá about how fare changes may be made to improve equity and access
among users.

65

70
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 3

INTRODUCTION

The impact of fare changes on public transport ridership (number of trips) has been an unsettled issue in
Colombian context. When the fare increases, the ridership tends to decrease. However, the magnitude of
75 such decrease is difficult to measure and can vary greatly between public transport systems, and also
depends on the traveler type, the time of day, the day of the week, the trip purpose, evaluation period, etc.
and if there are several viable options to choose. This is particularly important for a longer time period,
because ridership changes may be caused by other factors than the fare changes, e.g. the increased on
car/motorbike-ownership rates.
80
Fare increases are a common objective in our local public transport policies, which generally are
made in response to increases in operating costs. These cost increases for users, along with easiness for
purchasing substitute transport modes, like motorbikes, has made the public transport systems in
Colombia constantly loses users, in favor of fewer sustainable transport modes such as cars and
85 motorbikes. And as we don’t know the effect of a fare increase on ridership, these pricing policies tend to
have long-term negative effects. This paper seeks to solve this inconvenient by calculating the price-
demand elasticity in a system with integrated fares: the Transmilenio BRT system in Bogotá.

TM has increased his demand over the years. The expansion of the system during the last 15
90 years increasing the number of trunk lines, stations and feeding system make difficult to measure the
response of the demand to the fare increases considering the constant growth of passengers. The trend of
the demand behavior is considered for the model and isolated to prevent bias in the fare change effect
assessment. One of the main obstacles to estimating price elasticity of demand for public transport
services in integrated fare systems is the limited variation in fares over time [1]. The challenge in this case
95 is to develop a solid method of estimating fare elasticity of demand for Transmilenio (TM, henceforth)
using ridership and fare changes data. To overcome this obstacle, it was developed a statistical model
controlling information from variables such as day of the week, month, and year of application of fare
increases and the pricing of substitute alternatives of transport for the system’s demand.

100 There are several classic reviews in the international literature about this issue. E.g. Oum, Waters
and Young [2] and Goodwin [3] summarize some of the major studies of price-demand elasticities for
transport. In recent years, several public transport fare elasticity studies have been completed [1, 4, 5, 6,
7]. These studies include many different factors in those effects that fares have on public transport use,
like the nature of traveler, the type of public transport, time of day, trip purpose, and city geography. The
105 general conclusions were fare elasticities tend to increase in the long term, are affected by the time of the
day (off-peak values are higher than in the peak). Mandatory activities tend to have lower elasticity
values; elasticity values and their effects are not symmetric, and, Bus and Metro services could have
different elasticities [6].

110 The paper from Grange et al., [1] is close to ours in terms of dealing with the elasticity of a public
transport system in Latin America: Transantiago in Santiago de Chile. Our approach improves on their
proposal, mainly because: i) the quality of our data and our econometric approach that allows to use all
the information from fare changes during a long period of time: 2001-2012; ii) the inclusion of other
variables that could influence the demand which are controlled even if they are not observed using the
115 location of each station; iii) the fact that we can incorporate weekdays and weekends in our estimation;
and iv) the possibility of reporting different fare effects on demand for high and low-income zones.

The purpose of this paper is to estimate the price elasticity of demand for TM by using travel
demand and their respective fares changes over time in conjunction with elements related, like fuel prices
120 and regular public transport fares. The proposed methodology does not use information on travel times or
trip purposes because these data are not available at the spatial level with the same quality as the data on
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 4

demand and fares. Nonetheless, given the structure of the dataset our econometric model can deal with
some unobserved variables like average travel times, and other users profile by station that could affect
the proper identification of the elasticity.
125
THE TRANSMILENIO SYSTEM BACKGROUND

Bogotá city is a 7.8 million people city and an urbanized area of approximately 365 km2. It is currently a
conurbation with several surrounding municipalities, reaching a population around 9 million people. The
130 most important of these municipalities is Soacha, which with about 510,000 inhabitants, in practice is part
of Bogotá city forming a functional area which has been gradually emerging as the city extends beyond
its administrative boundaries. This “mega city” shared most of the problems of megacities over the world:
high travel times (even a relatively compact city), high spatial segregation, low access levels (especially
for the low-income population), low road safety indicators and poor air quality.
135
To initiate a structural change in transport conditions, the BRT system in Bogotá began
operations on 18 December 2000. A complete description about TM and its key features can be seen in
Gilbert [8]. Currently, the TM network is composed by 146 km of trunk corridors, 663 km of feeder lines
and 131 stations (divided into three construction phases and currently with 19 private operators), and
140 moves about 2.25 million passengers per day in 2015, including 3.6 Km of the trunk corridor in Soacha.
Currently, the system works on average 18.5 hours a day on weekdays, between 04:30 and 23:00h and its
average speed for the trunk corridors was of 25.7 Km/h in 2015.

The first phase of the system began operations at the end of 2000, accounting for 42 km of
145 exclusive lanes for articulated buses in four trunk lines. In 2007, the second phase became operational
with 84 km of exclusive corridors for 1,080 articulated buses, and 51 stations. Finally, in June 2012 phase
3 of the system became operational with 20 km of exclusive lanes and 133 articulated buses. The Soacha
corridor began operations in December 2013 and connects to Bogotá city through the trunk corridor of the
Carrera 30 (see Figure 1). This corridor has four stations and was designed to serve an estimated demand
150 of 70,000 passengers per day.

In addition to showing the TM network, the Figure 1 shows the proportion of low-income
households, which earn less than USD 618 per month (≤50th percentile). This spatial distribution is
classified by urban “zonal planning units” (UPZ), which are territorial units for planning the urban
155 development at the local level, including predominant land-uses and main activities. As it can be seen,
economic segregation is widespread in the city, with the low-income zones located in the urban periphery
(mainly south-west and south, in Soacha 86% of the total households earn less than 630 USD/month, and
some in the extreme north), whereas the richest areas are north of the traditional city center. Accordingly
to the available data, most (82%) of the households in Bogotá city earn less than 1,050 USD/month. This
160 shows significant inequalities in income distribution: around 5% of the households have a monthly
income above USD 2,100. This spatial distribution of income levels, will be useful when analyzes are
made by TM stations.

165

170
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 5

FIGURE 1. TRANSMILENIO NETWORK (TRUNKS AND FEEDER LINES)

175 The TM network covers almost the entire city with 112 routes: the trunk corridors cross the city
from north to south and from east to west, including the municipality of Soacha and feeder lines provide
access to the urban periphery, serving 472 neighborhoods with 113 routes. Feeder lines provide access to
the main terminals of TM routes at no additional charge (no feeder lines in Soacha). In peak periods, the
vehicle fleet available for operation includes 1,377 articulated buses, 303 bi-articulated, 260 regular buses
180 and 807 feeders.

Currently, TM has high levels of congestion. Moreover, the problem of congestion in peak hours
is increasing over time: demand peaks have become more acute, reaching a level where trips in this period
are around 50% (or more) of total daily travel demand met by TM [9].
185
The fare structure

Nowadays, in the TM system, there are two fare schemes: the technical fare and user’s fare. The
first one represents the actual cost per passenger transported through the system and is based on supply
190 and demand of the system. It also includes the adjusted costs of the system agents. It is updated monthly.
The user’s fare represents the fare paid by the users and result of rounding the technical fare. Until July
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 6

2012 was a flat fare. After this date, fares changed in peak hours and in off-peak hours (see Figure 2, left).
Then, in late 2015 the fare was flat again.

195 The system was created to be self-sustaining. This means that the revenues (technical fare x
tickets sold) must be equal to expenses (costs of trunk, feeder operators and management costs).
Additionally, according to the contract clauses 65 (phase 1) and 22 (phase 2), the technical fare must be a
balanced fare that constantly reflects the actual costs of operating the system. It also defines that the
system must be independent in its cash flow and does not need any external subsidy for operation.
200 Paradoxically, it also states that the user fare must be affordable and competitive with similar transport
systems.

FIGURE 2. FARE AND IPK

205
Thus, the technical fare adjustment is done monthly considering the cost weight of each agent in
the total cost of the system, the monthly change in costs (fuel, CPI), feeder passenger changes, tickets
sold, distance traveled and index of passenger per km (IPK). The IPK is important to determine if there is
a balance between revenues and operating costs. As it is shown in Figure 2 (right), the IPK has remained
210 approximately stable from 2006 to 2014, remaining on average 5.1 with variations less than 10%.
However, the downward trend of this indicator, contrasts with the increase in passenger demand during
the same period (Figure 3), which means that the supply system (km traveled) is not adequate and causes
high congestion levels, as actually it happens. This situation has a direct impact on the calculation of the
technical fare, because if the IPK decreases, the technical fare increases.
215
However, once the technical fare rising is identified, the change cannot be immediately
implemented to increase the user’s operational fare. Public transport fares are political instruments of hard
acceptance for the voters. Sometimes a fare increase is implemented several months after the technical
fare should be adjusted.
220
The passenger demand

According to the last mobility survey [10], in Bogotá city and Soacha there are about 16.25 million trips
in a typical workday, of which 8.3 million are in motorized modes. Of these trips, close to 62% are made
225 by public transport (41.4% by regular buses, 18.4% by TM, 0.4% inter-municipal and 1.7% by informal
transport1). Private cars, motorbikes and taxi complete the modal split.

1
In Soacha, around 10% of motorized trips are made by informal transport modes.
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 7

Almost every year since 2000 until July 2012, TM system fares have increased to try to cover the
operation costs. In 2014, 904.2 million passengers were mobilized in the TM system. This represents an
increase of 7.6% over 2013. The trunk corridors mobilized 628.3 millions of passenger and feeder lines,
230 275.8 million, representing a growth of 11% and 0.7%, respectively. The number of passengers using the
TM system has increased consistently since its opening, and the traditional public transport system
(regular buses) is losing users quickly (see Figure 3). In 2014, 249,000 passengers were counted on
average at peak hours (working day), which represents a 16% increase over the previous year and more
than 50% of the daily travel demand.
235

FIGURE 3. TRAVEL DEMAND OF PUBLIC TRANSPORT IN BOGOTÁ

240 These trends show that the total number of passengers carried by regular buses decreased
constantly, in part because of the implementation in 2013 of the Integrated Public Transport System
(SITP in Spanish) which aim to unify the public transport fleet and incorporated an integrated fare for the
operation of all its public transport sub-systems. Nevertheless, this behavior is also due to the strong
growth of motorbike and car fleets in the last 5 years.
245
The data

The data used with the proposed methodology to generate the elasticity source is a database, which
contains the number of entrances and exits for the TM system by station and day in a twelve-year period
250 from 2001 to 2012. This information is grouped spatially by phase of the system, trunk corridor and
finally by stations to classify the raw data of each fifteen-minute period of inbound and outbound users.
As long as exits of TM stations do not require cards’ validation to leave the system, thus, only the number
of passenger are available without any type of identification of the origin-destination flows. The grouped
data by day conformed with more than 588,000 observations identified by the specific day and the station.
255
The Figure 4 shows the time-series properties of the data, both by moth and by day of the week.
By differentiating the total number of entries by station the long run growing trend disappears and the
monthly and weekly cycles are easily perceived. To the left, in the months’ cycle the vertical (red) lines
represent December, to the right, in the daily’s cycle the vertical (red) lines represent Sunday.
260
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 8

FIGURE 4. CYCLES OVER MONTHS AND DAYS

265 The dependent variable used in the estimation of the demand model is the total number of
incoming passengers during the day in each station. This variable has been preferable to other demand
indicators such as total passengers or passenger-kilometer (which also includes aspects related to the
supply of the service) ore some others like operator revenues (which are affected by the pricing policy).

270 METHODOLOGY

To assess the impact of the fare increase, and respectively fare elasticity, a panel data model from
aggregated information from our data sample was specified and then estimated. One of the most
remarkable features of the economic literature is the wide variety of impact models proposed [9], which is
275 mostly linked to the choice of aggregation level of the data and to the choice of functional form. Indeed,
differences in types of data and in the model specifications are likely to affect empirical results applied to
relevant transport policies’ analysis such as elasticity values and traffic forecasts.

One of the advantages of the data set is the variability that it involves, and the long-run data (12
280 years) of daily information. As we try to address the issue of the pure price effect on demand, we must
control all kinds of factors that could be also affecting it. Considering that we have multiple records for
each unit of observation (the station), it is possible to use fixed effect econometric model, such a model
has big advantages as social context issues that could influence the demand, and that are constant in time
can be controlled [11, 12], this refers to aspects as type and time of travel, income level, and other users´
285 profiles.

In the estimation of the elasticity of TM it is possible to assume zero elasticity in the demand
side, at least in the short run window that is being implemented here. Fare prices are not the result of a
supply and demand market, but instead of the decision of an authority based on technical analysis of
290 operational costs. This means that we do not expect changes in the supply side to be affected by the fare
change. Furthermore, because of the timing in bureaucratic decisions is rather long, the time window that
will be used in our estimation, before a particular fare change, refers to the trip information that is not
likely to have influenced the decision on the magnitude or the specific moment of the fare change.

295 Given the two assumptions before we can be rather sure that there are not endogenous issues with
our dependent variable (trips) influencing our independent variable (fares). This is quite important
because this sort or reverse causality is common when trying to estimate the effect of prices in
consumption in a general setting.
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 9

300 Nonetheless, it remains a big concern with the estimation of fare changes’ effect on trips: there is
not a straightforward control group. As every change in the fare affects the full system at the same time,
there is no opportunity to see what would have happened if the fare were not changed at that specific date.
Because of it, we must find another way to synthetically reproduce this control group. A synthetic diff-in-
diff [12] estimation is implemented taking advantage of the cyclical properties of the data within the
305 context of a fixed effects econometric approach.

The econometric model takes advantage of the high variability present in the data. There is data at
the level of day and station for the first two phases of system. An analysis of the fare changes reveals that
it continuously happens the first (1st) day of the month, and that the month in which it is applied is not
310 always the same. This variation on the time of fare change is the key to our estimation.

Date of fare change Day of the week Fare change

st
October 1 2001 Monday + 5.8%
November 1st 2002 Friday + 11.1%
August 1st 2003 Friday + 10.0%
January 1st 2005 Saturday + 9.1%
August 1st 2006 Tuesday + 8.3%
July 1st 2007 Sunday + 7.7%
July 1st 2008 Tuesday + 7.1%
January 1st 2011 Saturday + 6.3%
January 1st 2012 Sunday + 2.9%
TABLE 1. DATES OF CHANGES ON FARES

The chosen approach is to measure the differences in the counted trips by station between the
315 days after the change of the fare and the days before, and compare this with the identical difference in the
those periods in which there was not a fare change. As the fare change in all stations at the same time,
with this econometric model our controls will be the differences in the same days of the month in the
years in which there were not such a fare change. As there are 12 years of data, for each fare change, there
are as controls between 11 and 9 years in which the change did not happen in such a month. Hence, the
320 reason we are calling it a synthetic diff-in-diff, what would have happened in a specific date is
reconstructed with information from the same month from different moments in time (both before and
after).

It is essential to notice that the simple measuring of the days before, and after the day of
325 implementation of a fare change is not a good solution. Given the cyclic properties of the data, one cannot
expect that such a difference will be zero, even in the absence of a constant growth. The construction of
controls that give us information on the size of such variation for different moments in the year when no
fare chance is present solves this problem.

330 This difference has another advantage because it controls the constant growing trends of trips in
time. A log transformation is used so the dependent variable (daily trips by station) can be read as the
percent change between before and after a moment in time (which is the first day of the month), making
the estimation independent on the specific level of trips for that day and station, making possible to build
our control from data at different points in time. This same argument is valid for the TM fare, gasoline
335 and regular buses fares, which are not measured directly but as a proportional change before and after of a
specific moment in time.
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 10

Even when the growth tendency is controlled with our variable specifications, it remains a
cyclical trend by day of the week and month of the year. To be able to control this seasonal factor,
340 dummy variables that identify when an observation corresponds to a particular day of the week, month
and year are implemented. It is because the change of fare varies throughout the day of the week and
month it takes place, that such effects could be isolated from the one produced by the fare change.

The Figure 5 represents the estimation approach. The regression calculates the effect that one
345 increase of the fare has on the (A–B) difference for each day of the week, taking account of the
differences due to day of the week, year, month and station. This aggregation by day of the week takes
account of the cyclic weekly properties of the series. It conveys more information to our estimation than
trying to average out the weekly cycle simple by using whole weeks instead of days.

350
FIGURE 5. ESTIMATION APPROACH

Time windows of 7, 14, 28 and 56 days (one, two, four and eight weeks) are used. The shorter the
time window the more easily we can sustain that we are seeing a pure effect of the fare, but at the cost of
355 a higher-level noise (the error term) in the data that decreases the accuracy of the estimation. This also
means that for each specification we are discharging all the information that is not within the time
window.

It is worthy to stress that this approach uses the cyclic properties of the data, and gets rids of their
360 medium and long term properties. This implies that the short-term effect of the fare can be measured but
disappearing information that relates to the medium and long-term impacts. These last two statements are
much more difficult to detect and need a totally different approach. The proposed econometric model is
the following:
7
∆𝑡𝑚𝑦𝑥 (: 𝑡𝑖𝑑𝑚𝑦𝑥 (𝐴) − 𝑡𝑖𝑑𝑚𝑦𝑥 (𝐵)) = 𝛽0 + 𝛽1 ∆𝑝𝑚𝑦 + 𝛽2 ∆𝑔𝑚𝑦 + 𝛽2 ∆𝑏𝑚𝑦 + ∑ 𝛽3.𝑑 𝑑𝑜𝑤𝑑
𝑑=1
12 2012
+∑ 𝛽4.𝑚 𝑚𝑡ℎ𝑚 + ∑ 𝛽5.𝑦 𝑦𝑒𝑎𝑟𝑦 + 𝑣𝑖 + 𝑢𝑖𝑗
𝑚=1 𝑦=2002
365
Where tijx is the logarithm of trip entries to an station (i) for each day of the week (j=Monday,
Tuesday…,Sunday) in the lapse of x=1, 2, 4, 8 weeks, after or before the first day of a particular month
(m) and year (y). The logarithmic difference change of the fare is ∆pmy, which is zero (0) if not such
change took place in that moment. Is the same for gasoline prices (∆gmy) and bus fares (∆bmy). The
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 11

370 dummies for each day of the week are dowd and dummies for each month are mthm. For each year, the
dummies are (yeary). The fixed effect of every station is vi and finally uij is the error term.

We are running separate regressions for two different levels of income: above and below the
median. A joint regression is not possible as we are using a fixed effect regression that is not able of
375 giving information on constant characteristics per observation (i.e. the relative income level of the station
immediate social context).

RESULTS

380 Considering the approach, we are measuring our principal variables: trips are in logs, and changes of the
fare are also in logs, both can be interpreted as percent changes, which means the regression gives us
directly an approximation to the elasticity values. We show results for all the data and for high income
and low-income zones of Bogotá. All values are statistical significant at 99%.

Income ≤ 50th Income > 50th

Time window Full data
percentile percentile
Coef. -0.45*** -0.46*** -0.44***
One week / 7 days
Std.dv. 0.083 0.129 0.106
Coef. -0.62*** -0.68*** -0.57***
Two weeks / 14 days
Std.dv. 0.061 0.100 0.076
Coef. -0.43*** -0.52*** -0.39***
Four weeks / 28 days
Std.dv. 0.033 0.057 0.041
Coef. -0.15*** -0.19*** -0.13***
Eight weeks / 56 days
Std.dv. 0.029 0.053 0.035
385 TABLE 2. ELASTICITIES BY TIME WINDOW AND INCOME LEVEL

The model is estimated under different alternatives to account for alternative treatments of
information regarding the type of elasticity to fare increase (see Table 2). The general coefficient (full
data column) relative to elasticity is negative, as expected, and significantly different from zero. At first
390 glance, this result appears to be coherent, suggesting that a change of fare does have an important effect
on TM use.

In line with the evidence from the wide literature on public transport elasticity estimation, short-
run elasticity is inelastic (absolute values less than 1) but at least in the very short run (less than a month)
395 higher than the general idea of begin about -03/-0.4 [1, 4, 6]. Thus, increasing prices is a policy that
immediately induces users to reduce the use of TM system; nonetheless, the increase in price more than
offset the decrease leading to an overall increase in the resources collected. We consider quality, by trying
to assess separately the effect by income and the temporal effects about the impact of a fare increase,
which reflect an accurate reaction of users. As it should be expected the elasticity is higher in the low-
400 income subsample.

The effects vary as well when the time window is extended. Changes in the effect of this time
variation suggests different reactions according to the perception of the fare increase. Under the two
weeks time window, the elasticity is higher than in the other specifications. They are probably driven by
405 the existence of several differences along the month in terms of money availability (income). Since
people in working classes get paid on the 15th and the 30th day of the month. Suggesting that on the
second and fourth week after fare was increased the availability of money is reduced and a small
difference in the fare is significant for demand behavior. Considering that all fare changes began in the
first day of the month there is no possible to control for this type of factors.
 Luis A. Guzmán\Carlos Moncada\Santiago Gomez 12

410
Results from our detailed model per income highlight the impact of specific characteristics of the
demand segmentation according to the time passing by once the increases are applied. In particular,
within the urban networks it seems important to differentiate the immediate effect and the declining of the
effect as time passes. This is coherent with the impossibility of having, in urban centers, significant
415 variations in mandatory trips due to specific reasons (e.g., work or study), while another type of trips
purposes such as leisure trips or shopping, may be more probably to be avoided or shifted to some other
transport modes.

CONCLUSIONS
420
The econometric challenge in this study was to find a method of identifying the magnitude of TM fare
elasticities given that changes in the fares have been too few, and a constantly growing travel demand.
The results, which have been tested in a panel data estimator of elasticity, highlight that not only a shift in
general is observed and causation is identified but also specific features, which are concerned with
425 income levels and the change of effect as time passes. Any pricing policy to increase or decrease fares
should be properly taken into account by local authorities, in order to offer alternatives to the demand for
collective transport.

Our findings show that the introduction of fare changes exerted a negative impact on passenger
430 immediate demand for our sample observed between 2001 and 2012 period. On average, the estimated
effects of integrated fares on patronage are -0.45 % in the very short-run of the first week, and about
-0.43% in the third week, for a 1% increase of the fare. Moreover, after 4 weeks the effect seems to
decline, but nonetheless, is still present. The values obtained for the 8-week time window suggest that
users tend to adapt to the new fare, considering that TM, compared with the rest of public transport, is the
435 most efficient transport mode for most of the population, particularly for long trips.

Since the widespread use of TM in Bogotá, and the relative high cost of it for the users compared
to similar ones in Latin America, the welfare impacts of the fare and its periodic increases are and
important issue. Reductions in demand following a fare increase are signs of this welfare impact to
440 household economy. All effects are more likely to emerge the higher the increase, the lower the income
and immediately the policy was implemented. Whether any fare policy affects the travel demand
behavior, in previous work [9], we observed that fare reductions have probably some other effects that
should be analyzed in terms of elasticity.

445 The increase of mobility needs associated with economic development raises continual concerns
about public transport systems. Solutions such as fare reductions in certain hours of the day or road
pricing, aimed at internalizing the social costs of transport have become popular. In this paper, we focus
on the first type of measures by investigating how much fare policy factors can affect public transport
demand.
450
REFERENCES

1. de Grange, L., F. González, J. C. Muñoz, and R. Troncoso. Aggregate Estimation of the Price
Elasticity of Demand for Public Transport in Integrated Fare Systems: The Case of Transantiago.
455 Transport Policy, Vol. 29, No. 0, 2013, pp. 178-185.
2. Oum, T. H., W. G. Waters, and J. Yong. Concepts of Price Elasticities of Transport Demand and
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