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on Transport Economics |
| By: | Eric Kroes (Significance, The Hague, and VU University Amsterdam, the Netherlands); Paul R. Koster (VU University Amsterdam, the Netherlands); Stefanie Peer (VU University Amsterdam, the Netherlands, and Vienna University of Economics and Business, Austria) |
| Abstract: | This paper develops a practical approach to estimate the benefits of improved reliability of road networks. We present a general methodology to estimate the (changes in) scheduling costs due to (changes in) travel time variability for car travel. We focus on situations where only mean delays are known, which are the typical output of a standard transport model. We show how to generate travel time distributions from these mean delays, which we use to estimate the scheduling costs of the travellers, taking into account their optimal departure time choice. We illustrate the methodology for car access by air passengers to Amsterdam airport and show how improvements of the highway network lead to shorter expected travel times, lower travel time variability, later departure times and reduced access costs. We find that on average the resulting absolute decrease in access costs per trip is small, mainly because most air passengers drive to the airport outside the peak hours. However, the relative reduction in access costs due to improvements in network reliability is substantial. For every 1-Euro reduction in mean travel time costs, there is an additional cost reduction of about 0.75-0.85 Euro due to lower travel time variability and hence lower scheduling costs. Our results thus show that the total benefits from infrastructure improvements are about 80% higher when benefits due to better reliability are taken into account in addition to the savings in mean travel time alone. |
| Keywords: | Value of reliability, Airport access, Dynamic accessibility, Travel time variability, Network reliability |
| JEL: | H23 R40 R41 R42 R49 |
| Date: | 2014–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140130&r=tre |
| By: | Martin W. Adler (VU University Amsterdam, the Netherlands); Jos N. van Ommeren (VU University Amsterdam, the Netherlands) |
| Abstract: | One of the main unanswered questions in the field of urban economics is to which extent subsidies to public transit are justified. We examine one of the main benefits of public transit, a reduction in car congestion externalities, the so-called congestion relief benefit, using quasi-natural experimental data on citywide public transit strikes for Rotterdam. On weekdays, a strike induces car speed to decrease only marginally on the highway ring road (by 3 percent) but substantially on inner city roads (by 10 percent). During rush hour, the strike effect is much more pronounced. The congestion relief benefit is substantial, equivalent to about half of the public transit subsidy. We demonstrate that during weekends, car speed does not change noticeable due to strikes. Further, we show that public transit strikes induce similar increases in number of cyclists as number of car travelers suggesting that bicycling-promoting policies to reduce car congestion externalities might be attractive. |
| Keywords: | transit subsidies, public transit, traffic congestion, congestion relief benefit, strike |
| JEL: | H76 J52 L92 R41 |
| Date: | 2015–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150011&r=tre |
| By: | Juranek, Steffen (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | This article investigates the incentives to unbundle operations and infrastructure in the railway industry in a two-country model with international network effects from the viewpoint of national governments. The analysis shows that the decision to unbundle institutionally or organizationally with separated accounts depends crucially on the importance of cross-border transportation. For a sufficiently high importance of cross-border transportation, national governments choose accounting separation. However, national governments are stuck in a Prisoners' dilemma and would be better off coordinating on a separated industry structure. This result justifies major policy initiatives by the European Union but explains also actions of national governments in implementing these initiatives. |
| Keywords: | Bundling; vertical integration; international competition; railway; regulation; cross-border transport |
| JEL: | F53 L50 L92 |
| Date: | 2015–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2015_018&r=tre |
| By: | Achim I. Czerny (VU University Amsterdam, the Netherlands); Anmin Zhang (University of British Columbia, Canada) |
| Abstract: | Most airports operate under public ownership, while some are privatized and economically regulated. Only a few airports are privately owned and experience little or no ex-ante regulation of airport charges. On the other hand, airports nowadays earn as much revenue from transport-related activities as from commercially-oriented business activities. Taken together, these two observations lead to a natural question: How to optimally integrate profits derived from commercial activities into the regulation of airport infrastructure charges? This question is addressed in this paper. We discuss basic issues that are relevant for the design of regulatory regimes for airports and how these issues can be tackled by using airport profits derived from commercial activities for infrastructure cost recovery. The main insights are summarized at the end of each section and then are further summarized in the conclusions section. |
| Keywords: | Airport; monopoly; regulation; single till; dual till |
| JEL: | L42 L51 L93 |
| Date: | 2015–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150049&r=tre |
| By: | Martijn I. Dröes (VU University Amsterdam); Piet Rietveld† (University of Amsterdam) |
| Abstract: | We examine the effect of railway travel on urban spatial structure in a polycentric urban land use model. We focus on the role of access to the railway network. We find that if the number of train stations is limited, the degree of urbanization is higher around train stations, but the effect of railway travel on road congestion is small. By contrast, if train stations are omnipresent there is little effect on urban spatial structure, but a considerable decrease in congestion. With regard to the supply of train stations, these findings suggest that there is an important policy trade-off between congestion and urbanization. |
| Keywords: | general equilibrium; public transport; land use model; railway; sorting |
| JEL: | C68 D58 R13 R14 R4 |
| Date: | 2014–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140050&r=tre |
| By: | Alexandros Dimitropoulos; Jos N. van Ommeren; Paul Koster; Piet Rietveld† (VU University Amsterdam) |
| Abstract: | This paper presents an approach for the estimation of welfare effects of tax policy changes under heterogeneity in consumer preferences. The approach is applied to evaluate the welfare effects of current tax advantages for electric vehicles supplied as fringe benefits by employers. Drawing on stated preferences of Dutch company car drivers, we assess the short-run welfare effects of changes in the taxation of the private use of these vehicles. We find that the welfare gain of a marginal increase in the taxation of electric company cars is substantial and even outweighs the marginal tax revenue raised. |
| Keywords: | Social welfare, Latent class, Stated preference, Company car, Electric vehicle, Plug-in hybrid |
| JEL: | D12 H23 H24 H31 O33 Q58 R41 |
| Date: | 2014–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140064&r=tre |
| By: | Achim I. Czerny (VU University Amsterdam, the Netherlands); Anming Zhang (The University of British Columbia, Canada) |
| Abstract: | This paper analyzes third-degree price discrimination of a monopoly airline in the presence of congestion externality when all markets are served. The model features the business-passenger and leisure-passenger markets where business passengers exhibit a higher time valuation, and a less price-elastic demand, than leisure passengers. Our main result is the identification of the time-valuation effect of price discrimination, which can work in the opposite direction as the well-known output effect on welfare. This time-valuation effect clearly explains why discriminating prices can improve welfare even when this is associated with a reduction in aggregate output. |
| Keywords: | Price discrimination, congestion, time valuation, monopoly, airline |
| JEL: | D42 L93 |
| Date: | 2014–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140140&r=tre |
| By: | Emmanouil Tranos (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam) |
| Abstract: | Some 2000 years ago, the average annual distance a person would normally travel, was approximately 500 km. The action radius of most people remained rather stable, but it rose gradually after the industrial revolution to some 1820 km (by car, bus, railway or aircraft) in the year 1960. Then, a period of rapid increase started, with almost 4390 km per year in 1990. Clearly, air transport, but also technological advances and changing lifestyles formed the background of this megatrend. Accessibility and proximity have become keywords in understanding the geographical pattern of the ‘homo mobilis’. The question is if and how this pattern of physical movement will be affected by the digital revolution. |
| Keywords: | Digital infrastructure, proximity |
| JEL: | O1 L63 |
| Date: | 2013–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130172&r=tre |
| By: | Hugo Emilio Silva (VU University Amsterdam); Robin Lindsey (University of British Columbia); André de Palma (University of British Columbia, Canada); Vincent A.C. van den Berg (VU University Amsterdam, the Netherlands) |
| Abstract: | This paper investigates the existence and uniqueness of equilibrium in the Vickrey bottleneck model when each user controls a positive fraction of total traffic. Users simultaneously choose departure schedules for their vehicle fleets. Each user internalizes the congestion cost that each of its vehicles imposes on other vehicles in its fleet. We establish three results. First, a pure strategy Nash equilibrium (PSNE) may not exist. Second, if a PSNE does exist, identical users may incur appreciably different equilibrium costs. Finally, a multiplicity of PSNE can exist in which no queuing occurs but departures begin earlier or later than in the social optimum. The order in which users depart can be suboptimal as well. Nevertheless, by internalizing self-imposed congestion costs individual users can realize much, and possibly all, of the potential cost savings from eit her centralized traffic control or time-varying congestion tolls. |
| Keywords: | Bottleneck model, Large users, Atomic users, Existence of Equilibrium, Uniqueness of Equilibrium |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140077&r=tre |
| By: | Paul Koster; Erik T. Verhoef (VU University Amsterdam, the Netherlands); Simon Shepherd; David Watling (University of Leeds, United Kingdom) |
| Abstract: | This paper deals with first-best and second-best congestion pricing of a stylised two-link network with probabilistic route choice of travellers. Travellers may have heterogeneous values of travel times and may differ in their idiosyncratic route preferences. We derive first-best and second-best tolls taking into account how the overall network demand responds to generalized costs including the tolls that are levied. We show that with homogeneous values of times the welfare losses of second-best pricing, of one link only, may be smaller if route choice is probabilistic. Furthermore, we show that with heterogeneous values of times, common second-best tolls and group-differentiated tolls can be very close when route choice is governed by random utility maximisation, leading to low welfare losses from the inability to differentiate tolls. |
| Keywords: | Stochastic User Equilibrium, Second-best Congestion Pricing, Preference Heterogeneity, Scale Heterogeneity, Probabilistic Choice |
| JEL: | R40 R41 R48 |
| Date: | 2014–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140078&r=tre |
| By: | Alexandros Dimitropoulos (VU University Amsterdam) |
| Abstract: | We examine the influence of drivers’ environmental concerns on their preferences for different types of plug-in electric vehicles (PEVs). Our empirical approach is built around the results of a large-scale survey among Dutch drivers, where preferences for electric vehicles are elicited through a choice experiment and environmental concerns are reflected in individual responses to Likert-type questions. On this basis, we develop advanced latent class models to study preference heterogeneity and its link to drivers’ socio-demographic background and environmental concerns. We find that environmental concerns are an important predictor of class membership and that highly concerned drivers tend to cluster in classes with a positive stand towards PEVs. High environmental concerns are positively associated with driver’s age and education, while negatively related to d river’s household income. |
| Keywords: | Latent class, Latent variable, Environmental concern, Electric vehicle, Plug-in hybrid |
| JEL: | D12 O33 Q58 R41 |
| Date: | 2014–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140128&r=tre |
| By: | Stefanie Peer (VU University Amsterdam, and Institute for the Environment and Regional Development, Vienna University of Economics and Business, Austria); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Erik Verhoef (VU University Amsterdam) |
| Abstract: | We asked participants of a large-scale, real-life peak avoidance experiment to provide estimates of their average in-vehicle travel time for their morning commute. Comparing these reported travel times to the corresponding actual travel times, we find that travel times are overstated by a factor of 1.5 on average. We show that driver- and link-specic characteristics partially explain the overstating. Using stated and revealed preference data, we investigate whether the driverspecific reporting errors are consistent with the drivers' scheduling behavior in reality as well as in hypothetical choice experiments. For neither case, we find robust evidence that drivers behave as if they misperceived travel times to a similar extent as they misreported them, implying that reported travel times do neither represent actual nor perceived travel times truthfully. The results presented in this paper are thus a strong caveat against the uncritical use of reported travel time data in transport research and policy. |
| Keywords: | travel time perception, reported travel times, valuation of travel time, departure time choices, peak avoidance experiment, panel latent class models, revealed preference (RP) data |
| JEL: | C25 D83 D84 R41 |
| Date: | 2013–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130123&r=tre |
| By: | Bruno De Borger (University of Antwerp, Belgium); Ismir Mulalic (Technical University of Denmark, Denmark); Jan Rouwendal (VU University Amsterdam) |
| Abstract: | In this paper we study the demand for car kilometres in two-car households, focusing on the substitution between cars in response to fuel price changes. We use a large sample of detailed Danish data on two-car households to estimate -- for each car owned by the household -- own and cross-price effects of increases in fuel costs per kilometre. The empirical results show that failure to capture substitution between cars within the household can result in substantial misspecification biases. Ignoring substitution, we estimate fuel price elasticities of –0.81 and -0.65 for the primary and secondary cars, respectively. When we do take into account the substitution effect, these figures reduce to, respectively, -0.32 and -0.45. We further estimate an alternative version of the model to test the hypothesis that substitution in response to higher fuel prices will be predom inantly from the least to the most fuel efficient car, finding partial support for the underlying hypothesis. More importantly, the results of this extended model emphasize the importance of behavioural differences related to the position of the most fuel efficient car in the household, suggesting that households’ fuel efficiency choices are related to their price sensitivity. |
| Keywords: | Fuel efficiency, car use, multiple car ownership, substitution effects, fuel consumption |
| JEL: | D12 R41 Q41 |
| Date: | 2013–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130158&r=tre |
| By: | Martin W. Adler (VU University Amsterdam); Jos van Ommeren (VU University Amsterdam); Piet Rietveld (VU University Amsterdam) |
| Abstract: | Non-recurrent congestion is frequently caused by accidents and other incidents. We estimate the causal effect of incident duration on drivers’ time losses through changes in non-recurrent road congestion on Dutch highways. We demonstrate that incident duration has a strong positive, but concave, effect on non-recurrent congestion. The duration elasticity of non-recurrent congestion is about 0.40 implying that a one minute duration reduction generates a €60 gain per incident. We also show that at locations with high levels of recurrent congestion, non-recurrent congestion levels are considerably higher. At very congested locations, the benefit of reducing the incident duration by one minute is about €500 per incident. Public policies that prioritize duration reductions at congested locations are therefore more beneficial. |
| Keywords: | congestion, vehicle-loss-hours, incident duration, accidents |
| JEL: | R4 |
| Date: | 2013–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130089&r=tre |
| By: | Bruno de Borger (University of Antwerp, Belgium); Ismir Mulalic (Technical University of Denmark, Denmark); Jan Rouwendal (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands) |
| Abstract: | We provide estimates of the rebound effect for car transport in Denmark, using a rich data set with individual household data on car use, fuel efficiency, and car as well as household characteristics. A demand model is estimated in first differences; the availability of households in the sample that replaced their car during the period of observation combined with information on their driving behaviour before and after the car switch allows us to identify the rebound effect. Endogeneity is taken into account by using appropriate instruments. Results include the following. First, we reject the 'conventional' formulation in which only fuel cost per kilometre matters. Second, the selection equation confirms that higher fuel prices induce households to switch car. Third, the results suggest the presence of a rebound effect that is on the lower end of the estimates available in the literature. Specifically, our best estimate of the rebound effect is some 7.5%-10%. Fourth, the fuel price sensitivity of the demand for kilometres appears to be declining with household income, but we do not find a significant impact of income on the rebound effect. Finally, simulation results indicate that the small rebound effect and changes in car characteristics in response to higher fuel prices imply that -- compared to the reference scenario -- higher fuel prices lead to a substantial reduction in both the demand for kilometres and in demand for fuel. |
| Keywords: | The rebound effect, fuel efficiency, first difference models |
| JEL: | D01 C02 |
| Date: | 2015–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150039&r=tre |
| By: | Stefanie Peer (VU University Amsterdam); Erik Verhoef (VU University Amsterdam); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Yin-Yen Tseng (VU University Amsterdam) |
| Abstract: | Earlier studies on scheduling behavior have mostly ignored that consumers have more flexibility to adjust their schedule in the long run than in the short run. We introduce the distinction between long-run choices of travel routines and short-run choices of departure times, using data from a real-life peak avoidance experiment. We find that participants value travel time higher in the long-run context, supposedly because changes in travel time can be exploited better through the adjustment of routines. Schedule delays are valued higher in the short run, reflecting that scheduling restrictions are typically more binding in the short run. |
| Keywords: | long-run vs. short-run; scheduling decisions; valuation of travel time; valuation of schedule delays; revealed preference data; car travel; peak avoidance |
| JEL: | C25 D03 D80 R48 |
| Date: | 2011–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20110181&r=tre |
| By: | Maria Dementyeva; Erik T. Verhoef |
| Abstract: | This paper studies road safety and accident externalities when insurance companies have market power, and can influence road users' driving behaviour via insurance premiums. We obtain both welfare and profit maximizing marginal conditions for first- and second-best insurance premiums for monopoly and oligopoly market structures in insurance. The insurance program consists of an insurance premium, and marginal dependencies ("slopes") of that premium on speed and on the own safety technology choice. While a private monopolist internalizes accident externalities up to the point where compensations to users' benefit matches the full (immaterial) costs, in oligopolistic markets insurance firms do not fully internalize accident externalities that their customers impose upon one another. Therefore, non-optimal premiums as well as speed and technology control apply. Analytical results demonstrate how insurance firms' incentives to influence traffic safety deviate from socially optimal incentives. |
| Keywords: | Accident externalities, congestion externalities, traffic regulations, road safety,second-best, market power |
| JEL: | D43 D62 R41 R42 R48 |
| Date: | 2015–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150025&r=tre |
| By: | Adriaan Hendrik van der Weijde (VU University Amsterdam) |
| Abstract: | This paper analyzes the effects of price differentiation and discrimination by a monopolistic transport operator, which sets fares in a congestible network. Using three models, with different spatial structures, we describe the operator’s optimal strategies in an unregulated market, a market where price differentiation is not allowed (i.e., ticket prices must be the same for all users), and a market where price discrimination is illegal (i.e., ticket prices must only differ with the marginal external costs of users), and analyze the welfare effects of uniform and non-discriminatory pricing policies. The three models allow us to consider three different forms of price differentiation and discrimination in networks: by user class, by origin-destination pair, and by route. We generalize the existing literature, in which groups usually only differ in their value of time, and hence, there is no distinction between differentiation and discrimination. In our models, users may also have different marginal external costs; we show how these two differences interact. We also show how non-differentiated and non-discriminatory policies may increase or decrease welfare, and that non-discrimination can be worse than non-differentiation. The network models show that results obtained for a single-link network can be generalized to a situation where operators price-discriminate or differentiate based on users’ origins and destinations, but not directly to a situation in which differentiation is based on route choices. |
| Keywords: | price differentiation, price discrimination, transport, networks, congestion |
| JEL: | L11 L51 L91 |
| Date: | 2014–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140099&r=tre |
| By: | Erik T. Verhoef (VU University Amsterdam, the Netherlands); Hugo E. Silva (VU University Amsterdam, the Netherlands) |
| Abstract: | Various contributions to the recent literature on congestion pricing have demonstrated that when services at a congestible facility are provided by operators with market power, the case in point often being a few airlines jointly using a congested airport, optimal congestion pricing rules deviate from the familiar Pigouvian rule that tolls be equal to the marginal external costs. The reason is that an operator with market power has an incentive to internalize the congestion effects that its customers and vehicles impose upon one-another, so that Pigouvian tolling would lead to overpricing of congestion. More recent contributions to this literature, however, have brought to the fore that when congestion at the facility takes on the form of dynamic bottleneck congestion à la Vickrey (1969), where trip scheduling is the key behavioural margin, there may exist no Nash e quilibrium in arrival schedules for oligopolistic operators also under rather plausible assumptions on parameters. This paper investigates whether in such cases, an equilibrium does exist for another congestion technology, namely the Henderson-Chu dynamic model of flow congestion. We find that a stable and unique equilibrium exists also in cases where it fails to exist under bottleneck congestion (notably when the value of schedule late exceeds the value of travel delays). Our results suggest that self-internalization with only two firms leads to a considerable efficiency gain compared to the atomistic equilibrium (83% or more of the gain from first-best pricing in our numerical exercises). |
| Keywords: | Congestion pricing, dynamic congestion, market power, internalization |
| JEL: | R41 R48 D62 |
| Date: | 2015–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150045&r=tre |
| By: | Adriaan Hendrik van der Weijde (VU University Amsterdam); Vincent A.C. van den Berg (VU University Amsterdam) |
| Abstract: | We compare three stochastic user equilibrium traffic assignment models multinomial probit, nested logit, and generalized nested logit), using a congestible transport network. We test the models in two situations: one in which they have theoretically equivalent coefficients, and one in which they are calibrated to have similar traffic flows. In each case, we examine the differences in traffic flows between the SUE models, and use them to evaluate policy decisions, such as profit-maximizing tolling or second-best socially optimal tolling. We then investigate how the optimal tolls, and their performance, depend on the model choice, and hence, how important the differences between models are. We show that the differences between models are small, as a result of the congestibility of the network, and that a better calibration does not always lead to better traffic flow predictions. As the outcomes are so similar, it may be better to use computationally more efficient logit models instead of probit models, in at least some applications, even if the latter is preferable from a conceptual viewpoint. |
| Keywords: | stochastic user equilibrium, traffic assignment, probit, generalized nested logit, tolling |
| JEL: | C63 R41 R48 |
| Date: | 2013–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130209&r=tre |
| By: | Hugo Emilo Silva (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam); Vincent van den Berg (VU University Amsterdam) |
| Abstract: | This paper resulted in a publication in <A HREF="http://www.sciencedirect.com/science/article/pii/S0191261514000939"><I>Transportation Research Part B: Methodological</I></A>, 2014, 67, 320-343.<P> This paper studies whether a regulator needs to correct the route structure choice by carriers with market power in the presence of congestion externalities, in addition to correct their pricing. We account for passenger benefits from increased frequency, passenger connecting costs, airline endogenous hub location and route structure strategic competition. We find that, for some parameters, an instrument directly aimed at regulating route structure choice may be needed to maximize welfare, in addition to per-passenger and per-flight tolls designed to correct output inefficiencies. This holds true when the regulator is constrained to set non-negative tolls, but also for the case of unconstrained tolling. |
| Keywords: | Route structure competition, Aviation policy, Hub-and-spoke networks, Fully-connected networks |
| JEL: | H2 L13 L93 R4 |
| Date: | 2013–11–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130189&r=tre |
| By: | M. Bockarjova (VU University Amsterdam); P. Rietveld (VU University Amsterdam); J.S.A. Knockaert (VU University Amsterdam) |
| Abstract: | In this paper, we apply a dynamic innovation diffusion framework to model adoption of full electric vehicles where we explicitly distinguish three major phases of adoption: introduction, growth and maturity. We combine this approach with an SP study to elicit individual preferences for conventional, hybrid and full electric vehicles. We apply a nested logit model to estimate the preferences for EVs based on the total costs of ownership approach that includes monetary and non-monetary costs of owing a vehicle. With negative estimates of WTP for hybrid vehicles (of about €900 on a yearly basis), our results suggest abolishment of subsidization of hybrid vehicles as they potentially crowd out EV adoption. Besides, EVs need to be subsidized on average at €2,000 per year, and this amount is decreasing in the process of vehicle adoption. Time costs associated with rapid charging are a substantial hindrance to EV adoption with average value of time of €63 per hour, increasing for each subsequent consumer segment from €48 to €122 per hour. Environmental costs of CO2 reductions are valued far above the market average at €160 per ton, but determine EV choices only at a later stage of adoption. Finally, towing potential is valued on average at €540 per year and it is about the same for all consumer segments throughout the adoption phases. Policy implications are discussed involving a mix of structural and monetary incentives. |
| Keywords: | stated preferences, revealed preferences, non-monetary costs, innovation |
| JEL: | C01 C33 D12 D49 D91 R41 |
| Date: | 2013–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130100&r=tre |
| By: | Hugo E. Silva (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam); Vincent A.C. van den Berg (VU University Amsterdam) |
| Abstract: | This discussion paper resulted in a publication in the <A href="http://www.sciencedirect.com/science/article/pii/S0094119013000594"><I>Journal of Urban Economics</I></A>, 2014, 13-27.<P> This paper analyzes efficient pricing at a congested airport dominated by a single firm. Unlike much of the previous literature, we combine a dynamic (bottleneck) model of congestion and a vertical structure model that explicitly considers the role of airlines and passengers. We show that when a Stackelberg leader interacts with a competitive fringe, charging the congestion toll that is derived for fully atomistic carriers to both leader and fringe yields the first-best outcome. This holds regardless of the leader's internalization of congestion in the unregulated equilibrium, and regardless of the assumed demand substitution pattern between firms. This result implies that thefinancial deficit under optimal pricing may be less severe than what earlier studies suggest. Finally, we show that there are various alternative toll regimes that also induce the welfare maximizing outcome, and therefore widen the set of choices for regulators. |
| Keywords: | Airport pricing, Congestion, Bottleneck model |
| JEL: | H23 L50 L93 R48 |
| Date: | 2012–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20120056&r=tre |
| By: | Achim I. Czerny (VU University Amsterdam, the Netherlands); Zijun Shi (Carnagie Mellon University, United States); Anming Zhang (University of British Columbia, Canada) |
| Abstract: | Many firms offer “core” and “side” goods in the sense that side-good consumption is conditional on core-good consumption. Airports are a common example where the supply of runway and terminal capacity is the core good and the supply of various concession services (for example, car rental services) is the side good. While side-good supply can be responsible for a major share in total revenue, monopoly regulation typically concentrates on the control of core-good prices (“core prices” in short). Whether market power can indeed be effectively controlled by the regulation of core prices alone then depends on whether core-good consumption is a function of the price for side goods. This study empirically shows that a one-dollar increase in the daily car rental price reduces passenger demand at 199 US airports by more than 0.36 percent. A major implication of our findings is that for the case of airports, the effective control of market power may require regulation of both prices for core and side goods. |
| Keywords: | Core goods; side goods; airport; monopoly; car rentals |
| JEL: | L12 L43 L93 |
| Date: | 2015–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150041&r=tre |
| By: | Stefanie Peer (VU University Amsterdam); Jasper Knockaert (VU University Amsterdam); Paul Koster (VU University Amsterdam); Yin-Yen Tseng (VU University Amsterdam); Erik Verhoef (VU University Amsterdam) |
| Abstract: | A common way to determine values of travel time and schedule delay is to estimate departure time choice models, using stated preference (SP) or revealed preference (RP) data. The latter are used less frequently, mainly because of the difficulties to collect the data required for the model estimation. One main requirement is knowledge of the (expected) travel times for both chosen and unchosen departure time alternatives. As the availability of such data is limited, most RP-based scheduling models only take into account travel times on trip segments rather than door-to-door travel times, or use very rough measures of door-to-door travel times. We show that ignoring the temporal and spatial variation of travel times, and, in particular, the correlation of travel times across links may lead to biased estimates of the value of time (VOT). To approximate door-to-door travel times for which no complete measurement is possible, we develop a method that relates travel times on links with continuous speed measurements to travel times on links where relatively infrequent GPS-based speed measurements are available. We use geographically weighted regression to estimate the location-specific relation between the speeds on these two types of links, which is then used for travel time prediction at different locations, days, and times of the day. This method is not only useful for the approximation of door-to-door travel times in departure time choice models, but is generally relevant for predicting travel times in situations where continuous speed measurements can be enriched with GPS data. |
| Keywords: | Valuation of travel time and schedule delays, door-to-door travel times, departure time choice, revealed preference (RP) data, door-to-door travel times, geographically weighted regression (GWR), GPS data, |
| JEL: | C14 C25 R48 |
| Date: | 2011–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20110180&r=tre |
| By: | Soushi Suzuki (Hokkai-Gakuen University,Japan); Peter Nijkamp (VU University Amsterdam) |
| Abstract: | Airports face a mutual competition. Consequently, they will be forced to improve the efficiency. Actual airport policies may comprise both short-term (flexible) adjustments and long-term (rigid) adjustments. Data Envelopment Analysis (DEA) is a standard tool to assess the relative efficiency. Two interesting approaches, namely Distance Friction Minimization (DFM) model and Context-Dependent (CD) model, are noteworthy here. DFM model serves to improve the performance of business activities by identifying the most appropriate movement towards the efficiency frontier surface. Likewise, CD model seeks to reach efficient frontiers in a series of steps. Stepwise DFM model is integrated of DFM and CD model. An extension of Stepwise DFM model is next achieved by including a fixed (rigid) input factor. In our study, the above-mentioned Stepwise Fixed Factor projection model is illustrated on the basis of a comparative study regarding an efficiency assessment of airports in Japan. |
| Keywords: | Data Envelopment Analysis (DEA), Stepwise Projection, Distance Friction Minimization, Context-Dependent Model, Fixed Factor, Airport Operations |
| JEL: | L93 |
| Date: | 2013–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130105&r=tre |
| By: | Hans R.A. Koster (VU University Amsterdam); Jos N. van Ommeren (VU University Amsterdam); Piet Rietveld (VU University Amsterdam, the Netherlands) |
| Abstract: | In this paper we investigate the effects of new railway stations on house prices using an extensive repeated sales dataset over a period of 13 years. We employ semiparametric panel data techniques allowing for anticipation effects of station openings. We show that a kilometre reduction in distance to the nearest railway station increases property values by about 1.5 - 2 percent. The geographical range of the effect is about 3.5 kilometres. Ignoring anticipation effects in the estimation procedure leads to a large downward bias for short time period datasets. We do not find any significant house price adjustment effects after station openings. |
| Keywords: | House prices; Anticipation effects; Repeated sales; Railway development; Semiparametric |
| JEL: | R21 R40 R41 R42 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20100094&r=tre |
| By: | Vincent A.C. van den Berg (VU University Amsterdam) |
| Abstract: | This paper resulted in a publication in <A HREF="http://www.sciencedirect.com/science/article/pii/S0191261514000356"><I>Transportation Research Part B: Methodological</I></A> 64, 1-23.<P> This paper analyses optimal coarse tolling of congestion under heterogeneous preferences, and especially the welfare and distributional effects. With coarse tolling, the toll equals a fixed value during the centre of the peak; outside this period, it is zero. This paper separately investigates three dimensions of heterogeneity. With the first, all values of time and schedule delay vary in fixed proportions ,and this heterogeneity may stem from income differences. The second has differences in the flexibility of users when to arrive. The third captures differences in willingness to arrive before or after the preferred arrival time. The paper uses three models of coarse tolling: the “Laih”, “ADL”, and “Braking” model. All three dimensions affect the welfare gain of coarse tolling. In the Laih model, the generalised price with coarse tolling is always in between the no -toll and first – best one. In the other models, this is not the case and distributional effects may be non-monotonic and very different from the first - best toll’s effects. In the Braking model, the bottleneck capacity goes unused for some time during the tolled period; compared with in the Laih model, this raises total cost, and it is most harmful for users with low values and difficulty to arrive late: e.g. low –income users with a strict work start time or a trip to the doctor. |
| Keywords: | Coarse tolling, heterogeneous preferences, distributional effects, bottleneck model, proportional heterogeneity |
| JEL: | D62 H23 R41 R48 |
| Date: | 2013–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130120&r=tre |
| By: | Christiaan Behrens (VU University Amsterdam); Nathalie McCaughey (Monash University, United States) |
| Abstract: | Frequent Flier Programs (FFPs) are said to impact airline consumer behaviour such that revenue of sponsoring airlines increases. Prior research relies on aggregate industry data to study FFPs. We examine the impact of FFPs on individual consumer behaviour in a quasi-natural experimental set-up using a combined discrete choice and count data model. We exploit an unanticipated change in the FFP to avoid self-selection bias. We derive the causal effect of redesigning a frequency reward program into a customer tier program on average transaction size, purchase frequency, revenues of the sponsoring airline, and compensating variation. We find that, on average, revenues increased by 8$ per member over a 16 month period. The welfare impact is small but positive. We find that, on average, consumer surplus increased by 5$ per member over a 16 month period. The results vary su bstantially across individuals. In line with previous studies, our results suggest that moderate buyers increase their average transaction size and purchase frequency most due to the introduction of the customer tier program. |
| Keywords: | Loyalty programs; Frequent Flier Programs; Two-stage budgeting model; Longitudinal demand models; Airline pricing |
| JEL: | D12 L11 R41 L93 |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150048&r=tre |
| By: | Mesbah J. Motamed (United States Department of Agriculture, United States); Raymond J.G.M. Florax (Purdue University, United States; and VU University Amsterdam, the Netherlands); William A. Masters (Tufts University, United States) |
| Abstract: | This paper addresses the timing of a location's historical transition from rural to urban activity. We test whether urbanization occurs sooner in places with higher agricultural potential and comparatively lower transport costs, using worldwide data that divide the earth's surface at half-degree intervals into 62,290 cells. From an independent estimate of each cell's rural and urban population history over the last 2,000 years, we identify the date at which each cell achieves various thresholds of urbanization. Controlling for unobserved heterogeneity across countries through fixed effects and using a variety of spatial econometric techniques, we find a robust association between earlier urbanization and agro-climatic suitability for cultivation, having seasonal frosts, better access to the ocean or navigable rivers, and lower elevation. These geographic correlations become smaller in magnitude as urbanization proceeds, and there is some variance in effect sizes across continents. Aggregating cells into countries, we show that an earlier urbanization date is associated with higher per capita income today. "Agriculture, Transportation and the Timing of Urbanization: Global Analysis at the Grid Cell Level" has been published in the "Journal of Economic Growth" (DOI 10.1007/s10887-014-9104-x). |
| Keywords: | Economic growth, economic geography, urbanization, agriculture, transportation |
| JEL: | C21 N50 O11 O18 R1 |
| Date: | 2014–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140002&r=tre |
| By: | Yuval Kantor (VU University); Piet Rietveld (VU University); Jos van Ommeren (VU University) |
| Abstract: | Mixed commercial and residential land use is observed in most cities around the world. This is in contrast to a myriad of bid rent models, which predict that mixed land use does not occur. The main exception are the models by Fujita and Ogawa (1982) and Lucas and Rossi-Hansberg (2002) that predict the presence of a very restrictive type of mixed land use. The latter study derives the equilibrium distribution of residential and commercial land uses while allowing for endogenous agglomeration externalities. We extend this model by introducing a traffic congestion externality. We show that congestion induces a general type of mixed land use zone, which is comparable to the type of zone assumed in the model of Wheaton (2004). The interplay between these externalities is then demonstrated, as reduced congestion leads to commercial concentration and agglomeration gains. |
| Keywords: | land use, congestion, agglomeration, externalities |
| JEL: | R13 |
| Date: | 2013–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130084&r=tre |
| By: | Sylvia Bleker (VU University Amsterdam, the Netherlands); Christiaan Behrens (VU University Amsterdam, the Netherlands); Paul Koster (VU University Amsterdam, the Netherlands); Erik T. Verhoef (VU University Amsterdam, the Netherlands) |
| Abstract: | This article investigates competition in a market with an emerging technology using a discrete choice model to analyze demand and welfare. We focus on industry structure and investigate the impact of different market structures on demand for the new technology and on welfare. The car market serves as a prime example of such a market, where electric vehicles (EV’s) represent the new technology competing with standard cars with internal combustion engines (ICV’s). To analyze such a market, we use a nested logit model. In contrast to earlier literature, we allow firms to be asymmetric and active in multiple nests, with different numbers of variants in each nest, which can add up to any market share. Additionally, we add to existing literature by considering the case where substitutability between firms is stronger than between technologies, by nesting products by technology instead of by firm. We find implicit analytical solutions for the equilibrium mark-ups which can be used when there are two nests in the market; within that restriction firms can be asymmetric. Numerically, we find that EV sales are higher if offered by a new entrant only selling EV’s as opposed to when it is supplied by a firm selling variants of both types. We present an index based on mark-up differences between variants in the market, which can be used to a priori determine whether a change in market structure would increase or decrease welfare. These results are general to the nested logit model, and the index can thus be used in any market, as long as the market is sufficiently accurately described by the nested logit model. |
| Keywords: | Nested logit model, asymmetry, market structure, welfare indices, emerging technology |
| JEL: | D43 D60 L11 L91 |
| Date: | 2014–10–28 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140142&r=tre |
| By: | Paul Koster (VU University Amsterdam); Hans Koster (VU University Amsterdam) |
| Abstract: | We employ a semi-parametric estimation approach to analyse observed and unobserved heterogeneity in the value of travel time and schedule delay. Our econometric approach allows for the estimation of unobserved and observed heterogeneity in preferences in a flexible way, meaning that we do not put any structure on how individual characteristics (such as income and age) relate to values of time and schedule delay. Using data from a stated choice experiment, we illustrate the estimation approach and find that there is substantial heterogeneity in the willingness to pay for reductions in travel time and schedule delay. For our data, unobserved heterogeneity is more important than heterogeneity related to individual characteristics. |
| Keywords: | local maximum likelihood, heterogeneity, scheduling, semiparametric Logit, latent class, normalised entropy criterion, value of time, value of reliability |
| JEL: | R4 C14 C23 |
| Date: | 2013–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130075&r=tre |
| By: | Ioannis Tikoudis (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam); Jos N. van Ommeren (VU University Amsterdam) |
| Abstract: | This paper investigates second-best congestion pricing in a monocentric city characterized by distortionary, rigid regulatory mechanisms in the housing market (building height restrictions, zoning and property taxation). The Pigouvian toll is shown to retain its optimality under any setting with quantity restrictions in the housing market. However, the extent of the quantity restriction determines the volume of the welfare gains in a non-monotonic fashion. This finding introduces a warning to cost-benefit analyses: our numerical results suggest that the actual gains of a road tax might be 40% lower than the gains predicted by a model that disregards maximum building height restrictions, and 80% higher than the gains suggested by a model that disregards zoning. In general, this implies that decision making on urban road pricing can ignore quantitative restrictions in the related markets of land, housing and labor insofar as the determination of optimal marginal tax rules is concerned; the tax levels stemming from those rules will be affected by the restrictions. However, this is not the case in the presence of a tax-induced distortion. Introducing an ad- valorem property tax on housing, we show that adjustments of the Pigouvian toll can lead to small, but not negligible welfare gains. |
| Keywords: | road pricing, building height restrictions, zoning, property tax, monocentric city, cost-benefit analysis |
| JEL: | R48 R52 R13 H21 H23 D61 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150006&r=tre |
| By: | Paul Koster (VU University Amsterdam); Stefanie Peer (Vienna University of Business and Economics, Austria); Thijs Dekker (University of Leeds, United Kingdom) |
| Abstract: | Limited memory capacity, retrieval constraints and anchoring are central to expectation formation processes. We develop a model of adaptive expectations where individuals are able to store only a finite number of past experiences of a stochastic state variable. Retrieval of these experiences is probabilistic and subject to error. We apply the model to scheduling choices of commuters and demonstrate that memory constraints lead to sub-optimal choices. We analytically and numerically show how memory-based adaptive expectations substantially increase commuters' willingness-to-pay for reductions in travel time variability, relative to the rational expectations outcome. |
| Keywords: | Memory, Transience, Expectation formation, Adaptive expectations, Retrieval Accuracy, Scheduling, Value of Reliability |
| JEL: | A12 D84 R41 |
| Date: | 2014–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140154&r=tre |
| By: | Peter E Robertson (Business School, University of Western Australia); Marie-Claire Robitaille (The University of Nottingham, Ningbo China) |
| Abstract: | Falling transport costs and the rise of global production networks have reshaped world trade. But endowments still determine production locations for fuels and minerals. Moreover, because they are often bulky or dicult to store, unit transport costs for natural resources may still be very large. To what extent, therefore, does geography remain an important determinant of comparative and absolute advantage in these markets? We estimate gravity models and show that some minerals and fuels, particularly Iron Ore and Gas, have very high elasticities of trade with respect to distance. We then consider counterfactuals, how trade would di er if location advantages were eliminated. We nd that for a few resource intensive countries, distance barriers have a large impact of their market share and are equivalent to a 70-100% ad valorem export tax relative to an average country. Similar implicit subsidies apply for a large number of well located countries. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:uwa:wpaper:15-01&r=tre |
| By: | Vincent A.C. van den Berg (VU University Amsterdam) |
| Abstract: | Consider a government tendering a facility, such as an airport or utility, where one bidder owns a competing facility. With a "standard auction", this "existing operator" bids above the auctioned facility's expected profit, as winning means being a monopolist instead of a duopolist. This auction leads to an unregulated outcome which hurts welfare. A consumer-price auction can alleviate this problem. With complementing facilities, the existing operator offers a price below marginal cost and is more likely to win than other bidders; with substitutes, it is less likely to win. Often, the advantaged bidder always wins, eliminating competition for the field. |
| Keywords: | Tender auction, existing operators, Advantaged bidder, Price auction |
| JEL: | D43 D44 L13 L51 |
| Date: | 2013–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130117&r=tre |