Limitations of using generalized transport costs to estimate changes in trip demand: a bias caused by the endogenous value of time

We show that constancy of value of time (VoT), which is assumed in generalized transport costs, can generate a significant bias in trip demand forecasts when travel time and travel fee change, because VoT endogenously changes in reality. Modeling shopping behaviors, we demonstrate that the change in trip demand through changes in travel time and travel fees differs even if the change in the travel fee is equivalent to the changes in the travel time in terms of generalized transport cost. This is because a decrease in travel time decreases VoT, whereas a decrease in travel fee increases VoT. Our simulation shows that the difference is large when there is a high substitutability between sites. This implies that demand estimation assuming a fixed VoT could be inadequate, and that it should treat VoT endogenously.