Highlights • The traditional quantitative approach to studying Bicycle Sharing System (BSS) usage ignores the infrastructure installation process. • Earlier research studies over-estimate the impact of BSS infrastructure. • We propose a single measurement equation to account for the installation process and relate it to the usage equations. • An elasticity analysis to highlight the advantage of the proposed econometric model is also conducted.

Abstract The traditional quantitative approach to studying Bicycle Sharing System (BSS) usage involves examining the influence of BSS infrastructure (such as number of BSS stations and capacity), transportation network infrastructure, land use and urban form, meteorological data, and temporal characteristics. These studies, as expected, conclude that BSS infrastructure (number of stations and capacity) have substantial influence on BSS usage. The earlier studies consider usage as a dependent variable and employ BSS infrastructure as an independent variable. Thus, in the models developed, the unobserved factors influencing the measured dependent variable (BSS usage) also strongly influence one of the independent variables (BSS infrastructure). This is a classic violation of the most basic assumption in econometric modeling i.e. the error component in the model is not correlated with any of the exogenous variables. The model estimates obtained with this erroneous assumption are likely to over-estimate the impact of BSS infrastructure. Our research effort proposes an econometric framework that remedies this drawback. We propose a measurement equation to account for the installation process and relate it to the usage equations thus correcting for the bias introduced in earlier research efforts by formulating a multi-level joint econometric framework. The econometric models developed have been estimated using data compiled from April 2012 to August 2012 for the BIXI system in Montreal. The model estimates support our hypothesis and clearly show over-estimation of BSS infrastructure impacts in models that neglect the installation process. An elasticity analysis to highlight the advantages of the proposed econometric model is also conducted.