Road Transport Elasticity: How Fuel Price Changes can Affect Traffic Demand on a Toll Motorway

Abstract

The crisis beginning in late 2008 in Greece, and still in progress, led the Greek Government to undertake a particularly harsh program under the joint auspices of the International Monetary Fund (IMF), the European Union and the European Central Bank, aimed at restoring the primary budget surplus. The implementation of such a financial program has dramatically increased fuel taxes - about 82% for unleaded and 31% for diesel – also producing a serious impact on road traffic demand. Starting from the above framework, this paper describes the main outcomes of a study aimed at identifying, assessing and forecasting the effects of fuel prices and tax changes on traffic flows along a 365 km toll motorway corridor project connecting Athens to Tsakona, in the South-West of the Peloponnese.