The Time-of-Day Travel Demand Elasticity Paradox

Driving demand and congestion are known to peak throughout the day, but temporal heterogeneity in travel demand elasticities is often overlooked. I estimate how the fuel economy elasticity of travel demand — a measure of the rebound effect from fuel economy standards — varies across peak and off-peak periods. The results present a paradox. Drivers are most elastic during peak demand periods. Mode switching for shorter commute trips appears to drive the heterogeneity, and the pollution benefits of fuel economy standards are shown to be more than offset by exacerbated congestion costs due to the timing of the rebound effect