This session deals with the application of economics to various emerging transportation problems. The four comprehensive papers include topics of public transportation, high-speed rail, and long-run construction costs.
Microeconomic Model for Designing Public Transit Incentive Programs
Yanshuo Sun, University of Maryland, College ParkShow Abstract
Lei Zhang, University of Maryland, College Park
The purpose of this study is to propose a microeconomic model for optimizing a government-sponsored transit incentive program, where a rider receives a certain monetary reward once a transit trip is completed. The demand pattern considered is many-to-many, which means riders travel from multiple origins to multiple destinations. Travelers are grouped by their socio-demographics and incentives can be customized to each rider group. Analytical relations are derived from the optimality conditions of the optimization problem and numerical results are conducted to illustrate some important findings. It is found that (1) the eligibility of a certain rider group for transit incentives depends on the magnitude of the cost of public funds, and (2) an increasing profit level diminishes the social welfare. The effect of cross-subsidization among multiple origin-destination pairs is also identified and analyzed.
The Healthiest Versus Greenest Path: Comparing the Effects of Internal and External Costs of Motor Vehicle Pollution on Route Choice
Mengying Cui, University of Minnesota, Twin CitiesShow Abstract
David Levinson, University of Sydney
On-road emissions, a dominant source of urban air pollution, damage human health. The healthiest path and the greenest path are proposed as alternative patterns of traffic route assignment to minimize the costs of pollution exposure and emission, respectively. As a proof-of-concept, the framework of a link-based emission cost analysis is built for both internal and external environmental costs and is applied to the road network in the Minneapolis - St. Paul Metropolitan Area based on the EPA MOVES and RLINE models. The healthiest and the greenest paths are skimmed for all work-trip origin-destination pairs and then aggregated into work trip flows to identify the healthier or greener roads in a comparative statics analysis. The estimates show that highways have higher emission concentrations due to higher traffic flow, on which, but that the internal and external emission costs are lower. The emission cost that commuters impose on others greatly exceeds that which they bear. In addition, the greenest path is largely consistent with the traditional shortest path which implies that highways tend to be both greener and shorter (in travel time) for commuters than surface streets. Use of the healthiest path would generate more detours, and higher travel times.
Optimal Pricing for a Linear High-Speed Rail Network Under Competition
Huizhuo Cao, Beijing Jiaotong UniversityShow Abstract
Xuemei Li, Beijing Jiaotong University
Vikrant Vaze, Dartmouth College
Xueyan Li, Beijing Jiaotong University
This paper focuses on pricing for high-speed rail (HSR) passenger fares when the HSR operator has multiple objectives. While many previous studies have focused on calculating optimal fares over railway networks, none of them has focused on characterizing the trade-offs between multiple objectives over a railway network under multi-modal competition. We use a bi-level programming model for multi-criteria HSR fare optimization over a linear network. The upper level model is a competitive game process among different transportation operators while the lower level model is a logit model of interaction between passengers and operators. We obtain and compare two single-criterion solutions and four multi-criteria solutions on a variety of metrics.
Our results based on a case study of Beijing-Shanghai HSR linear network provide several new insights. We find that the fares under profit-maximizing solutions are consistently higher than those under passenger welfare-maximizing solutions. Lexicographic optimization of profit and passenger welfare shows considerable improvements over either of the single-criterion pricing solutions. Additionally, we derive the Pareto Frontier between the criteria of profit and passenger welfare to enable the decision makers to choose the best trade-offs. We also find that small changes in fares can lead to a significant improvement in passenger welfare at no loss of profitability under multi-criteria solutions.
Long-Run Construction Costs: Trends and Implications
Omar Swei, University of British ColumbiaShow Abstract
Decision-support tools for infrastructure planning assume
that the real cost of construction will remain constant over the life cycle of a
facility. This paper is the first of its kind to evaluate the validity of this
assumption by assessing the long-run nature of construction costs. This study
begins by testing for the possibility that Baumol’s cost disease, a phenomenon
found in some industries in which wage growth outpaces productivity gains, thus
giving way to real cost growth, afflicts the construction sector. To do so, a
series of regression models are developed using historical macroeconomic data
from the U.S. Bureau of Economic Analysis on construction costs, compensation,
productivity, and the price of intermediate and capital goods. Since
construction cost growth is also closely tied to price changes for inputs, this
research extracts long-run real price trends of important intermediate goods
used in construction via time-series methods applied to publically available
data from the U.S. Bureau of Labor Statistics and U.S. Geological Survey. The
results of this study provide strong empirical evidence that Baumol’s cost
disease is present within the construction sector, while the real price of most
construction commodities has not exhibited a negative nor positive secular trend
over the last century. These two findings suggest that, contrary to the
conventional assumption found in current analytical frameworks, the real cost of
construction will rise in the long run. This study’s contribution should
motivate decision-makers to re-examine their existing decision-support tools, as
the value of policies that reduce project completion times and increase the
service life of facilities is potentially much higher than currently