Demand Functions for Services of Public Railway Passenger Transportation: An Empirical Analysis for Slovenia

Abstract

The paper deals with the estimation of demand functions for services of public railway passenger transportation in the case of Slovenia. Six demand functions were selected and separately interpreted. The aggregate values of demand elasticities reported in this paper suggest that the railway passenger demand is price and income inelastic. Coefficients of income elasticity below unity show that the services of railway passenger transportation in Slovenia can be classified among normal goods. A hypothetical increase in average real fares leads to a percentage decrease in the number of passengers travelling by rail that is smaller than the percentage increase in fares. The estimated price elasticities imply that, in the short run, there is potential for improving revenues of the railway operator by increasing average real fares.