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.     

Black Boxes - Pathetic progress but some success now in sight

Little has been written about the ship demolition market, an essential element in the supply/demand balance for shipping. Either technical or economic obsolescence may be the cause for scrapping a ship, where the latter is strongly influenced not only by anticipated freight market levels, but the rate at which more efficient ships are being introduced. The scrap value of a ship is a function both of the realizable value of the materials within the ship and cost of demolition. Both are strongly influenced by the cost structures prevailing in the likely country of demolition. The paper explores not only the fundamentals of the ship demolition market, but the trends from the 1960s to the present. The shipbreaking market has moved in that time from being West European-centred to Asian-centred, concentrating for some years in Taiwan, but now shifting to the Indian subcontinent.     

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.     

Net tax incidence for urban public transit subsidies in New Zealand

This paper examines the impact of policy changes in the funding of New Zealand public transit modes.These changes, introduced in 1983, are evaluated in terms of the net incidence of public transit subsidy assistance, taking into account its source of funding and the income class of those commuters benefiting from the subsidy. The general conclusion is that the net incidence of subsidy assistance remains progressive (i.e., a transfer from high to low income commuters) following the introduction of shared funding on the predominant public transit modes (rail and bus), sourced from income tax (central government) and property tax (regional/local government). However, because of the predominance of medium to high income commuters on rail vis-a-vis bus and the traditional source of funding on these modes in terms of income tax (a progressive tax source) and property tax (a regressive tax source), the degree of progressivity previously associated with public transit subsidies has now substantially reduced.The analysis and opinions expressed in this paper are the responsibility of the author alone and do not purport to represent the views of the Ministry of Transport.