Elasticity of market demand between modes of transport in Vietnam by price and income

Abstract

This study aims to determine the demand elasticity of passenger and freight transport market between different modes of transport in Vietnam by income, by price and by the price of substitute mode of transport (cross price). Upon consideration of the theoretical basis and inheriting the results of previous studies, this study applies a non-linear model to estimate the elasticity coefficients of demand. The analysis of the data for a 16-year period from 2001 to 2016 in Vietnam shows that as a general rule, the average per capita income is a factor that positively influences the transport market demand of different modes of transport. Freight rates, as a general rule, have an opposite effect on passenger transportation by waterway, freight transportation by road, by waterway and by air. Demand is greatly affected by the cross price in the freight transportation by air. The outcome of the research serves as a basis to propose business implications for executive management to make appropriate policies for each mode of transport and to create harmonization of all modes of transport.