Aggregate road passenger travel demand in New Zealand

Abstract

Road passenger transportation, which includes both private vehicles and public transport, is regarded a vital link that connects people and economic activities across New Zealand (NZ).1 Although a wealth of past literature has examined the demand for private and public transport both individually and jointly worldwide, little evidence was found analysing the demand for different road passenger transport choices as a system of equations. Given the fact that road passenger transport modes are considered substitutes to one another, there is a strong possibility that an interrelationship exists between the travel demand functions, primarily due to the correlation between their disturbances, a research gap that was thus discussed and addressed in this study. This paper uses the seemingly unrelated regression (SUR) method to develop an aggregate road passenger travel demand model. The Breusch-Pagan test of independence confirms the existence of correlated error terms in the three demand equations. Empirical results from the SUR model delivers various policy implications in terms of achieving a reduction in the demand for both petrol and diesel cars, and also promoting the use of public transport.