Assuring finite moments for willingness to pay in random coefficient models

Random coefficient models such as mixed logit are increasingly being used to allow for random heterogeneity in willingness to pay (WTP) measures. In the most commonly used specifications, the distribution of WTP for an attribute is derived from the distribution of the ratio of individual coefficients. Since the cost coefficient enters the denominator, its distribution plays a major role in the distribution of WTP. Depending on the choice of distribution for the cost coefficient, and its implied range, the distribution of WTP may or may not have finite moments. In this paper, we identify a criterion to determine whether, with a given distribution for the cost coefficient, the distribution of WTP has finite moments. Using this criterion, we show that some popular distributions used for the cost coefficient in random coefficient models, including normal, truncated normal, uniform and triangular, imply infinite moments for the distribution of WTP, even if truncated or bounded at zero. We also point out that relying on simulation approaches to obtain moments of WTP from the estimated distribution of the cost and attribute coefficients can mask the issue by giving finite moments when the true ones are infinite.     

Tradeoffs among free-flow speed, capacity, cost, and environmental footprint in highway design

This paper investigates differentiated design standards as a source of capacity additions that are more affordable and have smaller aesthetic and environmental impacts than modern expressways. We consider several tradeoffs, including narrow versus wide lanes and shoulders on an expressway of a given total width, and high-speed expressway versus lower-speed arterial. We quantify the situations in which off-peak traffic is sufficiently great to make it worthwhile to spend more on construction, or to give up some capacity, in order to provide very high off-peak speeds even if peak speeds are limited by congestion. We also consider the implications of differing accident rates. The results support expanding the range of highway designs that are considered when adding capacity to ameliorate urban road congestion.     

A Bayesian Methodology for Estimating the Impacts of Improved Coastal Ocean Information on the Marine Recreational Fishing Industry

The study develops a model of recreational fish catch probabilities, based on angler fishing strategies, that is conditional on uncertain information about the coastal ocean environment. We calculate expected catch based on a hypothetical Baseline Data Set and hypothetical data from an Integrated Ocean Observation System (IOOS) to demonstrate potential benefits from IOOS. The role of Bayesian probabilities in Random Utility Models of recreational fishing is identified. The study discusses the types of information that will be required by recreational anglers in the Gulf of Mexico. Results have implications for the construction of ocean observation systems for recreational fishermen.     

Circumventing the weight-versus-footprint tradeoffs in vehicle fuel economy regulation

China, Japan, and the European Union use weight-based fuel economy standards, whereas the US Department of Transportation favors footprint-based standards. In this paper we offer a way of reconciling these approaches. Weight-based standards tend to focus regulatory incentives on technology rather than downsizing, but they provide no incentive for weight reduction. Footprint-based standards, by contrast, motivate vehicle manufacturers to reduce weight without reducing footprint, but only to the extent that they are also motivated to increase footprint without increasing weight. Neither approach discriminates between beneficial and detrimental weight-changing strategies. However, the tradeoffs between weight and footprint can be circumvented by employing a weight-based standard, which does not create weight-changing incentives, in combination with complementary regulatory measures that would be focused specifically and exclusively on motivating beneficial weight reduction strategies.     

Primary productivity and export fluxes on the Canadian shelf of the Beaufort Sea: A modelling study

We present a coupled sea ice–ocean-biological (including ice algae) model in the Arctic Ocean. The 1D model was developed and implemented on the Canadian Beaufort Sea shelf to examine the importance of different physical processes in controlling the timing and magnitude of primary production and biogenic particle export over an annual cycle (1987). Our results show that the snow and sea ice cover melt and/or break-up controls the timing of the phytoplankton bloom but primary producers (ice algae and phytoplankton) on the outer shelf are essentially nutrient limited. The total annual primary production (22.7 to 27.7 g-C m^? 2) is thus controlled by nutrient “pre-conditioning” in the previous fall and winter and by the depth of wind mixing that is controlled in part by the supply of fresh water at the end of spring (ice melt or runoff). The spring bloom represents about 40% of the total annual primary production and occurs in a period of the year when sampling is often lacking. Time interpolation of observed values to obtain total annual primary production, as done in many studies, was shown to lead to an underestimation of the actual production. Our simulated ratios of export to primary production vary between 0.42 and 0.44.     

Adapting interactive stated response techniques to a self-completion survey

We report here on how we adapted Interactive Stated Response Methods to use in a self-completion survey of 454 California households to measure the market for electric vehicles in California. Electric vehicles are a novel product and have many features unfamiliar to consumers, in particular their home recharging capability and limited range. Reflexive techniques were designed to draw households into a deeper exploration of the lifestyle implications of electric vehicles than can be done in more typical self-completion surveys, and to stimulate key decision processes previously observed in detailed gaming interviews with 51 households. Reflexive self-completion techniques provide a middle course between typical large sample quantitative surveys and small sample, detailed gaming interviews. One of the benefits of the more intensive techniques was that participants reported finding the surveys interesting and return rates were high for a self-completion approach – over sixty percent. We review previous transportation and sociological methods which inspired our design, describe the design goals and features of our research, and summarize research results pertinent to testing the validity of our approach.     

Using the revenues from congestion pricing

The economic theory behind congestion pricing relies on using the revenues to help compensate highway users. But can practical methods of using revenues come close to achieving this compensation, and still have salient appeal to important political groups? This paper investigates the possibilities for designing a package of revenue uses that can achieve these twin goals. The suggested approach returns two-thirds of the revenues to travelers through travel allowances and tax reductions, and uses the rest to improve transportation throughout the area, including affected business centers. By replacing regressive sales and fuel taxes, this approach offsets the tendency of the prices alone to have a regressive distributional impact. By lowering taxes, funding new highways, improving transit, and upgrading business centers, the package provides inducements for support from several key interest groups. The potential amounts of money involved are discussed using nationwide data, and in more detail using a case study of ubiquitous facility pricing throughout the Los Angeles region. Illustrative calculations of the effects on various individuals confirm that such a package can create net benefits for a wide spectrum of people and interest groups.     

Consumers' responses to fuel-efficient vehicles: a critical review of econometric studies

In an effort to conserve fuel, Congress required that automobile manufacturers increase the average fuel efficiency of the vehicles which they sell. The extent to which this policy is successful in conserving fuel depends on how consumers respond to the more fuel-efficient vehicles. The present paper reviews previous economic research on automobile demand and examines what this research can tell us about how consumers will respond to fuel-efficient vehicles. Three categories of research are reviewed, namely aggregate econometric studies, disaggregate econometric studies, and hedonic price analyses. It is shown that insufficient variation and too large covariation among automobile characteristics (such as price, weight and length) are problems which hinder the usefulness of each type of analysis. Two methods to alleviate these problems are proposed for future research.     

A spatial equilibrium port cargo projection model

A mathematical spatial programming model developed to analyse changes in international and hinterland commodity flows through a regional port system is applied to wheat shipments through the U.S. Pacific Northwest port system. Two scenarios, one focusing on a Chinese quarantine on wheat shipments from the Pacific Northwest and the other on possible closure of barge transportation on the Columbia-Snake River, illustrate the capacity of the model to evaluate the impacts of international and hinterland shocks on the regional port system.