Geometric matching and spatial pricing in ride-sourcing markets

This paper develops a model to investigate the effects of spatial pricing on ride-sourcing markets. The model is built upon a discrete time geometric matching framework that matches customers with drivers nearby. We demonstrate that a customer may be matched to a distant vehicle when demand surges, yielding an inefficient supply state. We further investigate market equilibrium under spatial pricing assuming a revenue maximizing platform, and find that the platform may resort to relatively higher price to avoid the inefficient supply state if spatial price differentiation is not allowed. Although spatial pricing facilitates market clearing, the platform may still set price more than the efficient level, which compromises the public interest. We then propose a commission rate cap regulation that reaps the flexibility of spatial pricing and can achieve the second best under some homogeneity assumptions.     

Simultaneous determination of the equilibrium market penetration and compliance rate of advanced traveler information systems

We consider a specific advanced traveler information systems (ATIS) whose objective is to reduce drivers’ travel time uncertainty with recurrent network congestion through provision of traffic information. Since the provided information is still partial or imperfect, drivers equipped with an ATIS cannot always find the shortest travel time route and thus may not always comply with the advice provided by ATIS. Thus, there are three classes of drivers on a specific day: drivers without ATIS, drivers with ATIS but without compliance with ATIS advice, drivers with ATIS and in compliance with ATIS advice. All three classes of drivers make route choice in a stochastic manner, but with different degree of uncertainty of travel time on the network. In this paper we investigate the interactions among the three classes of drivers in an ATIS environment using a multiple behavior stochastic user equilibrium model. By assuming that the market penetration of ATIS is an increasing function of the actual private gain (time saving minus the cost associated with system use) derived from ATIS service, and the ATIS compliance rate of equipped drivers is given as the probability of the actual travel time of complied drivers being less than that of non-complied drivers, we determine the equilibrium market penetration and compliance rate of ATIS and the resulting equilibrium network flow pattern using an iterative solution procedure.     

Equilibrium properties of taxi markets with search frictions

The equilibrium properties of an aggregate taxi market are investigated using a general bilateral searching and meeting function which characterizes the search frictions between vacant taxis and unserved customers. Three specific issues are analyzed for meeting functions that exhibit increasing, constant and decreasing returns to scale. Firstly, service quality in terms of customer wait/search time and average profit per taxi are examined jointly in relation to taxi fleet size, and a Pareto-improving win-win situation is identified, where an increase in taxi fleet size leads to improvements in both service quality and market profitability. Such a Pareto-improving situation is found to emerge if and only if the meeting functions show increasing returns to scale. Secondly, the properties of the socially optimal solution are examined. It is found that the taxi fleet size should be chosen such that the total cost of operating vacant taxis equals the total cost of customer waiting time multiplied by an asymmetric factor of the meeting function, and that taxi services should be subsidized at social optimum only when the meeting functions show increasing returns to scale. Thirdly, the Pareto-efficient services are examined for trade-offs between social welfare and profits in the light of partially conflicting objectives of the public sector and the private taxi firms using a bi-objective maximization approach. The taxi utilization rate and the customer wait/search time or service quality are proved to be constant along the Pareto frontier and equal to those at social optimum if the meeting functions show constant returns to scale. Extensions are made to the cases with increasing and decreasing returns to scale.     

Intercontinental-airport regulation

This paper analyzes strategic interaction between intercontinental airport regulators, each of which levies airport charges paid by airlines and chooses its airport capacity under conditions of congestion. Congestion from intercontinental flights is common across intercontinental airports since departure and arrival airports are linked one to one, while purely domestic traffic also uses each airport. The paper focuses on two questions. First, if both continents can strategically set separate airport charges for domestic and intercontinental flights, how will the outcome differ from the first-best solution? Second, how is strategic airport behavior affected by the extent of market power of the airlines serving the intercontinental market? We see that strategic airport pricing and capacity choices by regulators lead to a welfare loss: the regulators both behave as monopolists in the market for intercontinental flights, charging a mark-up and decreasing capacity. This welfare loss even overshadows possible negative effects from imperfect competition within the intercontinental airline market. We further discuss how the presence of multiple regulators on one continent or a simple pricing rule might constrain the welfare loss created by strategic airport regulation.     

Customer choice patterns in passenger rail competition

This study explores determinants of customer choice behaviour in passenger rail competition on two cross-border routes, Cologne–Brussels and Cologne–Amsterdam. It fills a gap in the literature on competition in commercial passenger rail by relying on newly collected stated preference data from about 700 on-train interviews. Our multinomial Logit estimations reveal two important effects that are closely connected to (psychological) switching costs. First, the customers on the route Cologne–Amsterdam, for whom competition is a purely hypothetical situation, value a competitive market structure lower than customers on the already competitive route Cologne–Brussels. Second, travellers show a status quo bias with a preference for the service provider on whose trains they were interviewed. This effect goes beyond the impact exercised by explanatory variables capturing the observable differences of the services and customers, including loyalty-enhancing effects like the possession of customer cards. Our results imply that entry into the commercial passenger rail market may be more difficult than often thought. Thus, the study contributes to explaining the low level of competition in these markets in Europe.     

Autonomous cars and dynamic bottleneck congestion: The effects on capacity,value of time and preference heterogeneity

‘Autonomous cars’ are cars that can drive themselves without human control. Autonomous cars can safely drive closer together than cars driven by humans, thereby possibly increasing road capacity. By allowing drivers to perform other activities in the vehicle, they may reduce the value of travel time losses (VOT). We investigate the effects of autonomous cars using a dynamic equilibrium model of congestion that captures three main elements: the resulting increase in capacity, the decrease in the VOT for those who acquire one and the implications of the resulting changes in the heterogeneity of VOTs. We do so for three market organizations: private monopoly, perfect competition and public supply. Even though an increased share of autonomous cars raises average capacity, it may hurt existing autonomous car users as those who switch to an autonomous car will impose increased congestion externalities due to their altered departure time behaviour. Depending on which effect dominates, switching to an autonomous vehicle may impose a net negative or positive externality. Often public supply leads to 100% autonomous cars, but it may be optimal to have a mix of car types, especially when there is a net negative externality. With a positive (negative) externality, perfect competition leads to an undersupply (oversupply) of autonomous cars, and a public supplier needs to subsidise (tax) autonomous cars to maximise welfare. A monopolist supplier ignores the capacity effect and adds a mark-up to its price.     

Electric vehicles: How much range is required for a day’s driving?

One full year of high-resolution driving data from 484 instrumented gasoline vehicles in the US is used to analyze daily driving patterns, and from those infer the range requirements of electric vehicles (EVs). We conservatively assume that EV drivers would not change their current gasoline-fueled driving patterns and that they would charge only once daily, typically at home overnight. Next, the market is segmented into those drivers for whom a limited-range vehicle would meet every day’s range need, and those who could meet their daily range need only if they make adaptations on some days. Adaptations, for example, could mean they have to either recharge during the day, borrow a liquid-fueled vehicle, or save some errands for the subsequent day. From this analysis, with the stated assumptions, we infer the potential market share for limited-range vehicles. For example, we find that 9% of the vehicles in the sample never exceeded 100 miles in one day, and 21% never exceeded 150 miles in one day. These drivers presumably could substitute a limited-range vehicle, like electric vehicles now on the market, for their current gasoline vehicle without any adaptation in their driving at all. For drivers who are willing to make adaptations on 2 days a year, the same 100 mile range EV would meet the needs of 17% of drivers, and if they are willing to adapt every other month (six times a year), it would work for 32% of drivers. Thus, it appears that even modest electric vehicles with today’s limited battery range, if marketed correctly to segments with appropriate driving behavior, comprise a large enough market for substantial vehicle sales. An additional analysis examines driving versus parking by time of day. On the average weekday at 5 pm, only 15% of the vehicles in the sample are on the road; at no time during the year are fewer than 75% of vehicles parked. Also, because the return trip home is widely spread in time, even if all cars plug in and begin charging immediately when they arrive home and park, the increased demand on the electric system is less problematic than prior analyses have suggested.     

A behavioral choice model of the use of car-sharing and ride-sourcing services

There are a number of disruptive mobility services that are increasingly finding their way into the marketplace. Two key examples of such services are car-sharing services and ride-sourcing services. In an effort to better understand the influence of various exogenous socio-economic and demographic variables on the frequency of use of ride-sourcing and car-sharing services, this paper presents a bivariate ordered probit model estimated on a survey data set derived from the 2014–2015 Puget Sound Regional Travel Study. Model estimation results show that users of these services tend to be young, well-educated, higher-income, working individuals residing in higher-density areas. There are significant interaction effects reflecting the influence of children and the built environment on disruptive mobility service usage. The model developed in this paper provides key insights into factors affecting market penetration of these services, and can be integrated in larger travel forecasting model systems to better predict the adoption and use of mobility-on-demand services.     

Equilibria of bilateral taxi–customer searching and meeting on networks

This paper proposes an equilibrium model to characterize the bilateral searching and meeting between customers and taxis on road networks. A taxi driver searches or waits for a customer by considering both the expected searching or waiting time cost and ride revenue, and a customer seeks a taxi ride to minimize full trip price. We suppose that the bilateral taxi–customer searching and meeting occurs anywhere in residential and commercial zones or at prescribed taxi stands, such as an airport or a railway station. We propose a meeting function to spell out the search and meeting frictions that arise endogenously as a result of the distinct spatial feature of the area and the taxi–customer moving decisions. With the proposed meeting function and the assumptions underlying taxi–customer search behaviors, the stationary competitive equilibrium achieved at fixed fare prices is determined when the demand of the customers matches the supply of taxis or there is market clearing at the prevailing searching and waiting times in every meeting location. We establish the existence of such an equilibrium by virtue of Brouwer’s fixed-point theorem and demonstrate its principal operational characteristics with a numerical example.     

Air transport and high-speed rail competition: Environmental implications and mitigation strategies

We build a duopoly model to shed light on the environmental impact of HSR-air transport competition, capturing the effects of induced demand, schedule frequency and HSR speed. The net environmental effect can be negative since there is a the trade-off between the substitution effect – how many passengers using the HSR are shifted from air transport – and the traffic generation effect – how much new demand is generated by the HSR. We conduct a simulation study based on the London-Paris market where HSR has served 70% of the market. The introduction of HSR is detrimental to LAP, while it is beneficial to GHG emissions. HSR entry increases neither LAP nor GHG emissions when the ratio between HSR and air transport emissions is relatively low. Moreover, competition is more likely to be detrimental to the environment when the weight of the social welfare in HSR objective function is high. Since the magnitude of the environmental friendliness of HSR compared to air transport hinges on the mix of energy sources used to generate the electricity (which is heavily constrained by the country in which HSR operates), regulators should assess the implications of HSR entry taking into account the energy policy and mitigation strategies available to transport modes.     

A two-stage approach to modeling vacant taxi movements

In this paper, a two-stage modeling approach is proposed to predict vacant taxi movements in searching for customers. The taxi movement problem is formulated into a two-stage model that consists of two sub-models, namely the first and second stage sub-models. The first stage sub-model estimates the zone choice of vacant taxi drivers for customer-search and the second stage sub-model determines the circulation time and distance of vacant taxi drivers in each zone by capturing their local customer-search decisions in a cell-based network within the zone chosen in the first stage sub-model. These two sub-models are designed to influence each other, and hence an iterative solution procedure is introduced to solve for a convergent solution. The modeling concept, advantages, and applications are illustrated by the global positioning system data of 460 Hong Kong urban taxis. The results demonstrate that the proposed model formulation offers a great improvement in terms of root mean square error as compared with the existing taxi customer-search models, and show the model capabilities of predicting the changes in vacant taxi trip distributions with respect to the variations in the fleet size and fare. Potential taxi policies are investigated and discussed according to the findings to provide insights in managing the Hong Kong taxi market.     

Airline competition and market frequency: A comparison of the s-curve and schedule delay models

We compare two common ways of incorporating service frequency into models of airline competition. One is based on the so called s-curve, in which, all else equal, market shares are determined by frequency shares. The other is based on schedule delay—the time difference between when travelers wish to travel and when flights are available. We develop competition models that differ only with regard to which of the above approaches is used to capture the effect of frequency. The demand side of both models is an approximation of a nested logit model which yields endogenous travel demand by including not traveling in the choice set. We find symmetric competitive equilibrium for both models analytically, and compare their predictions concerning market frequency with empirical evidence. In contrast to the s-curve model, the schedule delay model depicts a more plausible relationship between market share and frequency share and accurately predicts observed patterns of supply side behavior. Moreover, the predictions from both models are largely the same if we employ numerical versions of the model that capture real-world aspects of competition. We also find that, for either model, the relationship between airline frequency and market traffic is the same whether frequency is determined by competitive equilibrium, social optimality, or social optimality with a break-even constraint.     

A cell-based logit-opportunity taxi customer-search model

This paper proposes a cell-based model to predict local customer-search movements of vacant taxi drivers, which incorporates the modeling principles of the logit-based search model and the intervening opportunity model. The local customer-search movements were extracted from the global positioning system data of 460 Hong Kong urban taxis and inputted into a cell-based taxi operating network to calibrate the model and validate the modeling concepts. The model results reveal that the taxi drivers’ local search decisions are significantly affected by the (cumulative) probability of successfully picking up a customer along the search route, and that the drivers do not search their customers under the random walk principle. The proposed model helps predict the effects of the implementation of the policies in adjusting the taxi fleet size and the changes in passenger demand on the customer-search distance and time of taxi drivers.     

Characteristics of particulate matter (PM) concentrations influenced by piston wind and train door opening in the Shanghai subway system

More than 9 million passengers take Shanghai’s subway system every work day. The system’s air quality has caused widespread concern because of the potential harm to passengers’ health. We measured the particulate matter (PM) concentrations at three kinds of typical underground platform (side-type, island-type, and stacked-type platforms) and inside the trains in Shanghai’s metro during 7 days of measurements in April and July 2015. Our results demonstrated that the patterns of air quality variation and PM concentrations were similar at the side-type and island-type platforms. We also found that the PM concentrations were higher on the platforms than inside the train and that the PM concentrations in the subway system were positively correlated with those in the ambient air. Piston wind generated by vehicle motion pushes air from the tunnel to the platform, so platform PM concentrations increase when trains approach the platform. However, the piston wind effect varies greatly between locations on the platform. In general, the effect of the piston wind is weaker at the middle of the platform than at both ends. PM concentrations inside the train increase after the doors open, during which time dirty platform air floods into the compartments. PM_1.0 and PM_2.5 were significantly correlated both inside the train and on the platforms. PM_1.0 accounted for 71.9% of PM_2.5 inside the train, which is higher than the corresponding platform values. Based on these results, we propose some practical suggestions to minimize air pollution damage to passengers and staff from the subway system.     

The cost of convenience; Air pollution and noise on freeway and arterial light rail station platforms in Los Angeles

Light rail transit (LRT) systems constitute one of the most sustainable public transportation modes and transit agencies have increasingly constructed LRT lines along the median of roadways to reduce land acquisition costs and traffic conflicts. Despite these conveniences, few studies have examined the air pollution and noise exposures for passengers on LRT station platforms within freeway or arterial medians. In response, we monitored particle number count (PNC) concentrations and noise levels on 17 station platforms in the Los Angeles metro system in summer 2012 and assessed differences between freeway and arterial platforms. We visited each station on average 7 times for approximately 19 min with two teams carrying a full set of instruments. As expected, impacts were higher on green line platforms in the center of a grade-separated freeway compared to blue line platforms in the center of an arterial due to being in close proximity to greater traffic volumes. Overall, freeway-arterial platform differences were 35,100 versus 20,000 particles/cm³ for PNC and 83 versus 62 dBA for noise. This average noise intensity on green line platforms was four times that on blue line stations. We also found that PNC concentrations were significantly higher at open air monitoring platform positions compared to standing under a shade canopy (about 2000 particles/cm³ higher), but that noise levels were significantly lower at open air positions compared to under canopy positions (about 3.2 dBA lower). Results identify important factors for transport planners to consider when locating and designing in-roadway LRT platforms.     

A two-sided market platform analysis for the electric vehicle adoption: Firm strategies and policy design

This study explores how to facilitate the electric vehicle (EV) diffusion from a two-sided market platform competition. We develop a stylized model depicting the platform competition between electric and gasoline vehicles by combining indirect network effects of consumer and energy supplier sides as well as vehicle manufacturers’ profits. The findings of this study provide several meaningful strategic and policy implications for EV manufacturers and policymakers who wish to enhance EV diffusion. First, EV sales are significantly influenced by indirect network effects from the energy supplier side to the consumer side, and vice versa. This implies that EV manufacturers who wish to boost EV diffusion should implement a strategy providing energy suppliers with incentives to willingly join the EV platform. Second, the dynamic nature of the effects of energy costs on platform competition might render counter-intuitive evidence that the drop in oil prices does not always negatively influence EV sales. This requires EV manufacturers to prepare a contingent strategy adjusting to such unexpected conditions. Third, governments should consider the energy supplier side as well as the consumer side in designing EV diffusion policies. When governments have a very challenging EV diffusion target, a balanced policy, which treats both gasoline and electric vehicle technologies fairly, may be more effective than a consumer subsidy policy.     

Nonlinear pricing of taxi services

This paper examines the effects of nonlinear fare structures in taxi markets using an extended taxi model with an explicit consideration of perceived profitability. The expected profit, defined as the profit per unit time (inclusive of both occupied and vacant taxi times), that a taxi driver expects to receive from picking up a customer in a particular zone or location, has great impact on the taxi driver’s choice of location in the search for customers. The fare structure directly governs the profitability of taxi rides of different distances originating from different locations. With these explicit considerations, the extended model is intended to look into the market effects of adopting a nonlinear fare structure with declining incremental charges. The proposed nonlinear fare structure could help restore a level-playing field for taxi operators whose businesses have been affected by some taxi drivers who resort to practices such as offering fare discounts or accepting requests for discounted fares from passengers for long-haul trips. Analysis of sensitivity of social welfare and profit gain as well as taxi/customer wait/search times is conducted with respect to the parameters in the nonlinear fare structure for the Hong Kong taxi market, and Pareto-improving nonlinear fare amendments are identified that neither disadvantage any customer nor reduce the taxi operators’ profits.     

Integrating intermodal transport with logistics: a case study of the UK retail sector

Retail traffic is one of the main drivers for the growth of intermodal transport services in the UK. This paper examines the key factors underpinning this modal shift in order to learn lessons for other market and geographical contexts. Since successful retail intermodal logistics involves many actors, this paper is based on semi-structured interviews with major UK retailers, third-party logistics providers (3PLs) and rail operators, supplemented by document analysis. The qualitative data are analysed via a conceptual framework derived from the literature. Despite past successes and the presence of drivers for future growth, the paper identifies many operational issues without current solutions and the presence of ongoing public subsidy. The major conclusion is that the importance of 3PLs, aggregation and multi-user platforms must be recognised by transport planners in supporting the use of intermodal transport by retailers and other large shippers.     

The train platforming problem: The infrastructure management company perspective

If railway companies ask for station capacity numbers, their underlying question is in fact one about the platformability of extra trains. Train platformability depends not only on the infrastructure, buffer times, and the desired departure and arrival times of the trains, but also on route durations, which depend on train speeds and lengths, as well as on conflicts between routes at any given time. We consider all these factors in this paper. We assume a current train set and a future one, where the second is based on the expected traffic increase through the station considered. The platforming problem is about assigning a platform to each train, together with suitable in- and out-routes. Route choices lead to different route durations and imply different in-route-begin and out-route-end times. Our module platforms the maximum possible weighted sum of trains in the current and future train set. The resulting number of trains can be seen as the realistic capacity consumption of the schedule. Our goal function allows for current trains to be preferably allocated to their current platforms.Our module is able to deal with real stations and train sets in a few seconds and has been fully integrated by Infrabel, the Belgian Infrastructure Management Company, in their application called Ocapi, which is now used to platform existing and projected train sets and to determine the capacity consumption.     

Acquisition,efficiency and scale economies: An analysis of the British bus industry

The British Bus industry has undergone considerable transformation since privatization. Five major operators have emerged to dominate the market, a position almost exclusively attained through acquisition. This paper reviews the economies of scale argument commonly cited for this change and gives an overview of the acquisition process. It questions whether this argument gives a complete explanation for this industry development. For 58 individual companies, the level of technical efficiency attributable to firms operating at or near the optimum level of output is examined over 5 years to determine if mergers in practice have resulted in scale economies. Technical efficiency is estimated using data envelopment analysis, under assumptions of constant and variable returns to scale. Efficiency scores are then regressed on a time trend and a merger dummy to test whether acquired firms' efficiency has significantly improved above the average. It was found that over the period, efficiency had improved. This improvement, however, cannot be wholly attributed to the achievement of economies of scale. More specifically, there has been an improvement in the internal efficiency of acquired firms and some scale economies within group companies, the latter of which may have resulted from the eradication of competition.