Year of Publication

2014

College

Martin School of Public Policy and Administration

Executive Summary

Streetcars have made a comeback in cities in North American in the last several decades; there are now over 45 cities operating, building, or planning streetcars. The majority of these streetcars are viewed primarily as catalysts for economic development, rather than as a means of public transportation. However, the streetcar’s claim of promoting development is backed by surprisingly little evidence.

Although carrying out an analysis of the impact of streetcars on economic development is beyond the scope of this paper due to problems with data availability, methods of performing such an analysis are discussed. This includes a list of cities with modern streetcars, potential indicators of economic development, as well as control variables which should be included. In addition, ridership, population, and streetcar fare data was collected for six cities with modern streetcars: Kenosha, WI, Portland, OR, Tacoma, WA, Little Rock, AK, Tampa, FL, and Seattle, WA. Using this data, I predict ridership over time and estimate the price elasticity of demand. These results can be used to help cities set their fare rates and understand potential ridership.

This analysis shows that demand for streetcars is price-inelastic at -0.33. As fare increases, ridership decreases slowly and steadily, and as population increases, ridership increases. Cities should use this information to understand that setting a higher fare will increase their revenue. In addition, similarly sized cities can use mean ridership to predict their own streetcar ridership. The analysis contains several limitations, such as a small sample of cities as well as problems with data availability. This method can be repeated with a larger sample if data can be found on ridership in order to estimate a more accurate elasticity of demand. In addition, the discussion of development indicators and other factors can be used to conduct a comprehensive empirical analysis of the impacts of streetcars on economic development.

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