A nested logit model of travel mode to work and auto ownership

Estimating the demand for urban passenger travel is very useful in transport planning. This study estimates a joint model of choice for both auto ownership and travel mode to work in Karachi, Pakistan. The model used for analysis is based on stochastic utility maximization and is estimated utilizing nested logit techniques. The purpose of the study is to measure the impact of various policy changes on welfare. The model reveals that the decision to own a car is made simultaneously with the decision regarding mode of travel to work. However, the study shows that had this simultaneity been ignored, the loss in terms of bias in the estimated coefficients would not have been large. The model has several advantages over conventional transport demand models. It is estimated using a small household sample; it is behavioral and responsive to more important policy instruments available to a planner; it allows one to make welfare comparisons between various policy regimes; and it enables one to calculate the effect of a policy change or change in the attributes of various modes on the demand for each mode and auto ownership.