Use of Elasticity Models to Model Variable Demand: Review of TRL Work

This report is a review of TRL's Unpublished Project Report UPR/T/019/05 'Report of additional tests on VADMA advice'. That report covered two main areas of work: the impact of convergence on the calculation of economics benefits and various tests relating to fuel cost elasticities. The latter work is the focus of this review. Its most important conclusion was that simple elasticity models and multistage variable demand models gave significantly different estimates of scheme benefits, leading to the VADMA recommendation that the former should no longer be used in scheme appraisal. The full report is included in Appendix A.

The scope of the review is as follows:

• Determine whether TRL's methodology is correct.
• Consider whether any errors in the methodology are likely to affect TRL's conclusions.
• Highlight any further important issues raised by the results of TRL's work.
• Set out any implications of the results of the above review for the current project 'Use of elasticity models to model variable demand.'

Use of Elasticity Models to Model Variable Demand: Review of TRL Work (732 kb)

This report is a review of TRL's Unpublished Project Report UPR/T/019/05 'Report of additional tests on VADMA advice' which covered two main areas of work.

Published:

13 December 2006