Modeling Automobile Demand and Driver Population in Palestinian Territories: Simultaneous-Equation Estimation Method

Abstract

Automobile demand has been extensively investigated because of its direct effects on many related fields, including travel behavior, public policy and management, and transportation impact analysis. A modeling framework is developed to estimate aggregate automobile demand using simultaneous-equation regression analysis. This modeling approach is used to estimate automobile demand and driver population in the Palestinian Territories, where major changes in the political, socioeconomic, and infrastructure systems are currently under way. The developed model captures a number of relevant socioeconomic and political variables believed to affect automobile ownership in the Palestinian Territories. The findings suggest that there is a strong interrelationship and simultaneity between automobile ownership and the population of drivers. Relevant tests are applied to examine the econometric specifications of the presented models, which indicate that income, price, demographic, and employment variables are considered significant in the simultaneous-equation model. The model can be used as a basis for forecasting automobile demand.