Transaction costs and tradable mobility credits

Artificial markets for mobility credits have been proposed as an alternative to conventional congestion pricing schemes. This paper examines the effects of transaction costs on two types of markets: an auction market and a negotiated market. In an auction market, users purchase all of the needed mobility credits through a competitive bidding process. In a negotiated market, the users initially receive certain amount of mobility credits from the government and trade with each other through negotiation to fulfill their needs. We assume that a brokerage service is built in both markets to facilitate transactions and accordingly, the users have to pay a commission fee proportional to the value of trade. The users are also given the option to purchase credits from the government if for some reasons they cannot use or wish to avoid the markets. Our analyses suggest that the auction market can achieve the desired equilibrium allocation of mobility credits as long as the government sets its price properly and the unit transaction cost is lower than the price that the market would reach in absence of transaction costs. However, in the negotiated market, transaction costs could divert the system from the desired equilibrium regardless of their magnitude. More importantly, the initial allocation of mobility credits may affect the final equilibrium even when marginal transaction costs are constant.     

Auction-based highway reservation system an agent-based simulation study

Based on previous studies of a highway reservation system, this paper proposed an auction-based implementation, in which the users can bid for the right to use a route during a certain period of time. This paper models the auction system with MATSim using an agent-based simulation technique. The agents adopt their own bidding logic in the auction, and the price converges after around 130 iterations, when the number of users using the reserved highway and the total collected revenue become stable. When the overall demand changes, the collected revenue ranges from 5 to 11 dollars per user, and from 0.7 to 1.5 dollars per mile. The auction system can transfer more consumer surplus to the toll road operators, since it is a personalized tolling mechanism. The users are using the reservation system as insurance of a guaranteed congestion-free travel. The auction-based highway reservation shows great potential as a new traffic management system.     

Analysis of dynamic decision-making in a bicycle-sharing auction using a dynamic discrete choice model

For clarifying the usefulness and practical issues of a tradable permit system empirically, we implemented a tradable permit system for a bicycle-sharing service in Yokohama city, Japan. We analyzed both travel and transaction behavior within this system. Many activity factors, such as the amount of free time in each day, home location and travel mode to the bicycle port, were shown to affect the transaction of tradable permits. The results of the pilot program indicated that inefficient allocation of tradable permits occurred when participants postponed their decision-making because of uncertainty. To determine the reason for this effect and the contributing factors, we created a dynamic discrete choice model to describe the choice results and timing. The estimation result indicated that the option value of postponing decision-making caused the transactions to be performed at the last minute, and that this effect blocked the liquidity of the permits trade. In addition, because the result reveals that there was heterogeneity in the time discount factor, the initial allocation of permits was found to be important for efficient allocation.

     

Personal tradable carbon permits for road transport: Why, why not and who wins?

Personal road transport sector poses a significant challenge in reducing carbon emissions. This paper evaluates a policy approach known as personal tradable carbon permits to reduce carbon emissions from personal vehicles. The policy is a downstream tradable permit where individuals are allocated carbon emission caps. The policy is qualitatively evaluated in the context of carbon taxes and some upstream tradable permit options. The biggest disadvantage of such a policy is the initial set up costs. Personal tradable permits, however, are more effective than carbon taxes and are also capable of stabilizing the gasoline prices faced by the consumers when the underlying oil prices fluctuate. Since equity effects are often a concern to policy makers, the effect of such personal carbon permits on the distribution of burden is quantified in a partial equilibrium framework for the US population. Different permit allocation strategies are investigated in this regard. Using US consumer expenditure survey data, and incorporating a differentiated price response for different households, we find that all three allocation strategies considered are progressive: a per adult based allocation is the most progressive, a per vehicle allocation nearer to proportional, and a per capita allocation in between the two. Personal tradable permits therefore take care of equity concerns directly through the design of the policy.     

Serial private infrastructures

This paper investigates private supply of two congestible infrastructures that are serial, where the consumer has to use both in order to consume. Four market structures are analysed: a monopoly and 3 duopolies that differ in how firms interact. It is well known that private supply leads too high usage fees, and that a serial duopoly leads to even higher fees than a monopoly, as firms are monopolists on their sections. But, as this paper finds, a duopoly can also lead to a different capacity rule than the first-best one, and this distortion differs from with two parallel facilities. Finally, four auction formats for the right to build and operate facilities are investigated. With a bid auction, the competition is on how much to pay the government. This auction leads to the same outcome as no auction. An auction on the facility’s capacity leads to an even lower welfare than no auction, as firms set overly large high capacities. Conversely, an auction on the generalised price or number of users leads to the first-best outcome, which they do when the facilities go to one or two winners and both with serial as with parallel facilities.     

A novel permit scheme for managing parking competition and bottleneck congestion

Morning commuters may have to depart from home earlier to secure a parking space when parking supply in the city center is insufficient. Recent studies show that parking reservations can reduce highway congestion and deadweight loss of parking competition simultaneously. This study develops a novel tradable parking permit scheme to realize or implement parking reservations when commuters are either homogeneous or heterogeneous in their values of time. It is found that an expirable parking permit scheme with an infinite number of steps, i.e., the ideal-scheme, is superior to a time-varying pricing scheme in the sense that designing a permit scheme does not require commuters’ value of time information and the performance of the scheme is robust to the variation of commuters’ value of time. Although it is impractical to implement the ideal-scheme with an infinite number of steps, the efficiency loss of a permit scheme with finite steps can be bounded in both cases of homogeneous and heterogeneous commuters. Moreover, considering the permit scheme may lead to an undesirable benefit distribution among commuters, we propose an equal cost-reduction distribution of parking permits where auto commuters with higher value of time will receive fewer permits.     

The diffusion of cleaner vehicles in CO2 emission trading designs

The accelerated diffusion of cleaner vehicles to reduce CO₂ emissions in transport can be explicitly integrated in emission trading designs by making use of cross-sectoral energy efficiency investment opportunities that are found in data on CO₂ emissions during the production and the use of cars and trucks. We therefore elaborate the introduction of tradable certificates that are allocated or grandfathered to manufacturers that provide vehicles (and other durable goods) that enable their customers to reduce their own CO₂ emissions. This certificate is an allowance for each tonne CO₂ avoided. Manufacturers can then sell these certificates on the emission market and use the revenues to lower the price of their cleanest vehicles. This mechanism should partially overcome the price difference with less efficient cars. In a simulation, we found that the introduction of the certificate in tradable permit systems can lead to very significant reductions of CO₂ emissions. The simulations indicate that CO₂ emissions resulting from the car fleet can be reduced by 25 to 38% over a period of 15 years (starting in 1999). For the truck fleet, the reduction potential is more limited but still very interesting.     

How to restrain participants opt out in shared parking market? A fair recurrent double auction approach

We propose a fair recurrent double VCG (FRD-VCG) auction mechanism to approach the emerging shared parking management problem. In a given shared parking environment with a parking management platform and a double-side perspective, the proposed mechanism considers how to restrain the potential participants (parking slot demanders and slot suppliers) opt out, which is based on the participants’ priority attributes and are calculated with respect to historic auction records provided by the parking platform. Participants’ fairness bids are then generated combining their priority attributes and their submitted bids (bid price and parking time) with the support of a novel evaluation function, which integrates priority attributes, bid price and parking time into an output value. The parking slot allocation rule and transaction payment rule are further designed to dealing with these issues include winner determination and price setting, respectively. Simulations show advantages of the proposed FRD-VCG mechanism, i.e., comparing with the double VCG (D-VCG) mechanism for the shared parking management problem where priority attributes and evaluation function are not considered, the proposed FRD-VCG mechanism has the potential to persuade participants to remain in the market whilst it improves the market’s retention rate, the parking slot’s utilization rate and the participants’ utilities.     

The Role of Tradable Credit Schemes in Road Traffic Congestion Management

Abstract

Road traffic congestion is not yet reflected in current market prices within the sector and has given rise to a number of instruments to mitigate the resulting negative impacts. The focus of this paper is the tradable credit scheme — an incentive-based economic measure — in order to address traffic congestion. The research questions are (1) whether the state-of-the-art in the literature suggests that tradable credit schemes could be feasibly introduced to mitigate congestion, and (2) whether a tradable credit scheme could have advantages over other instruments. A brief outline of congestion mitigation approaches is provided first to position this type of economic instrument with respect to other measures. The broad issues in the design of a tradable credit scheme are then presented. Most research to date has focused on the use of tradable credits to manage related pollution, but it is clear there is potential to design a scheme for traffic congestion management. To date this is a novel review of tradable credit schemes that has focused specifically on their role in road traffic congestion management.     

Trial and error method for optimal tradable credit schemes: The network case

Recent studies on the new congestion reduction method―tradable credit scheme rely on the full information of speed‐flow relationship, demand function, and generalized cost. As analytical travel demand, functions are difficult to establish in practice. This paper develops a trial and error method for selecting optimal credit schemes for general networks in the absence of demand functions. After each trial of tradable credit scheme, the credit charging scheme and total amount of credits to be distributed are updated by both observed link flows at traffic equilibrium and revealed credit price at market equilibrium. The updating strategy is based on the method of successive averages and its convergence is established theoretically. Our numerical experiments demonstrate that the method of successive averages based trial and error method for tradable credit schemes has a lower convergence speed in comparison with its counterpart for congestion pricing and could be enhanced by exploring more efficient methods that make full use of credit price information. Copyright © 2013 John Wiley & Sons, Ltd.     

Continuous price and flow dynamics of tradable mobility credits

This study examines the price and flow dynamics under a tradable credit scheme, when the credits can be traded in a free market. A continuous dynamic model in a finite time horizon is proposed to describe the travelers’ learning behavior and the evolution of network flows and credit price, and then the existence and uniqueness of the equilibria are established. The conditions for stability and convergence of the dynamic system as the time horizon extends to infinity and the impact of limited implementation time horizon on the system behavior are investigated.     

Tradable network permits: A new scheme for the most efficient use of network capacity

Akamatsu et al. (2006) proposed a new transportation demand management scheme called “tradable bottleneck permits” (TBP), and proved its efficiency properties for a single bottleneck model. This paper explores the properties of a TBP system for general networks. An equilibrium model is first constructed to describe the states under the TBP system with a single OD pair. It is proved that equilibrium resource allocation is efficient in the sense that the total transportation cost in a network is minimized. It is also shown that the “self-financing principle” holds for the TBP system. Furthermore, theoretical relationships between TBP and congestion pricing (CP) are discussed. It is demonstrated that TBP has definite advantages over CP when demand information is not perfect, whereas both TBP and CP are equivalent for the perfect information case. Finally, it is shown that the efficiency result also holds for more general demand conditions.     

Tradable credit schemes on networks with mixed equilibrium behaviors

This paper analyzes and designs tradable credit schemes on networks with two types of players, namely, a finite number of Cournot–Nash (CN) players and an infinite number of (infinitesimal) Wardrop-equilibrium (WE) players. We first show that there are nonnegative anonymous credit schemes that yield system optimum, when transaction costs are not considered. We then analyze how transaction costs would affect the trading and route-choice behaviors of both CN and WE players, and discuss the equilibrium conditions on the coupled credit market and transportation network in the presence of transaction costs. A variational inequality is formulated to describe the equilibrium and is subsequently applied to a numerical example to assess the impacts of transaction costs on a tradable credit system. As expected, transaction costs reduce the trading volume of credits and change their market price. They also change the way how players respond to credit charges in their route choices and cause efficiency losses to the credit schemes that are previously designed without considering transaction costs. With transaction costs, travel costs of WE players will likely increase while those of CN players may decrease due to their higher adaptability in routing strategies.     

Demand responsive transit systems with time-dependent demand: User equilibrium,system optimum,and management strategy

The operating cost of a demand responsive transit (DRT) system strictly depends on the quality of service that it offers to its users. An operating agency seeks to minimize operating costs while maintaining the quality of service while users experience costs associated with scheduling, waiting, and traveling within the system. In this paper, an analytical model is employed to approximate the agency's operating cost for running a DRT system with dynamic demand and the total generalized cost that users experience as a result of the operating decisions. The approach makes use of Vickrey's (1969) congestion theory to model the dynamics of the DRT system in the equilibrium condition and approximate the generalized cost for users when the operating capacity is inadequate to serve the time-dependent demand over the peak period without excess delay. The efficiency of the DRT system can be improved by optimizing one of three parameters that define the agency's operating decision: (1) the operating capacity of the system, (2) the number of passengers that have requested a pick-up and are awaiting service, and (3) the distribution of requested times for service from the DRT system. A schedule management strategy and dynamic pricing strategies are presented that can be implemented to manage demand and reduce the total cost of the DRT system by keeping the number of waiting requests optimized over the peak period. In the end, proposed optimization strategies are compared using a numerical example.     

The use of transferable permits in transport policy

This paper considers potential use of domestic transferable, or tradable, permit systems for the purposes of travel management, especially reducing environmental nuisances. The main arguments for and against the use of permits are analyzed. Secondly two case studies of existing permit systems are examined. The main conclusions are that tradable permits can address greenhouse gas and regional atmospheric pollutant emissions, and are suitable for congestion on a restricted time–space basis. Permits applied to mobile sources are technically feasible at acceptable financial cost for protecting sensitive geographical areas, and schemes applied to automakers for unitary vehicle emissions are also viable.     

Seattle smart traveler: dynamic ridematching on the World Wide Web

Seattle Smart Traveler (SST) is an application of World Wide Web (WWW) technology to test the concept of automated dynamic rideshare matching. In SST, the rideshare clientele interact with the rideshare system using only WWW pages. SST collects spatial and temporal trip information using a series of WWW pages, performs a match using structured query language (SQL) specifications to a database engine, and supports both the standard phone-based contact methodology as well as two new, unique e-mail-based contact methodologies. SST was operated in parallel to a traditional, regional rideshare system for one year, and the two systems were marketed to the user community on a side-by-side basis. SST and the traditional system acquired approximately the same number of new users over a nine-month test period; however, there was little overlap in the population using the two parallel systems. SST demonstrates that there is a user population that can be reached using Internet technologies for immediate/dynamic ridematching that is not reached by traditional ridematch programs. This paper also reports a new statistical model for quantifying rideshare matching and carpooling. The model is validated using the SST experimental results, and the model demonstrates that the carpooling process is a quadratic function of the number of users participating.     

Modeling user adoption of advanced traveler information systems: a control theoretic approach for optimal endogenous growth

This study is a subsequent development of the dynamic evolution model of the market penetration of advanced traveler information systems (ATIS) proposed by Yang and Meng [Transport. Res. A 35 (2001) 895]. In previous study we have shown that a benefit-driven, user-optimal ATIS market does not necessarily lead to a socially optimal growth and optimal stationary equilibrium level of market penetration of ATIS products or services. The current study proposes an optimal time-dependent service pricing strategy so as to minimize total system cost throughout the time horizon of growth or optimally reach a socially desirable target level of ATIS market penetration in a final stationary equilibrium. We formulate the problem of interest as an optimal control problem and propose an efficient solution algorithm together with a numerical demonstration of the characteristics of the study problem.     

On the effect of operational service attributes on transit satisfaction

Public transport (PT) providers aim to offer services that meet users’ satisfaction, and for this, they can control some operational service attributes such as frequency, speed, crowdedness and reliability. Understanding how these objective attributes affect user satisfaction is essential to improve it cost-effectively, but these associations have not been examined enough in the PT literature. This study aims to unveil how key transit operational variables actually experienced by users affect their satisfaction. We analysed data derived from a multiannual consumer satisfaction survey for the Santiago de Chile Metro system; between January 2013 and June 2016 (n?=?41,993), where approximately 1000 questionnaires were completed each month. We also gained access to a set of operational variables managed by Metro for the same period, including more than 1.4 million records. With this unique dataset, we first developed a structural equation model (SEM) with users’ perceived attributes, finding that safety, ease of boarding, response to critical incidents (CI), the number and type of CI endured, and information, were the variables that mostly affected satisfaction. We also examined heterogeneity in transit satisfaction with SEM-MIMIC models, by characterising the user population through their trip and socioeconomic characteristics, finding a striking result: that as users age they are more satisfied with the system. Next, we assessed whether including operational service attributes, such as crowding levels, frequency, commercial speed and CI, added predictive power to the proposed model. We found that the number of CI, speed, frequency and crowdedness, plus their variability (measured through the coefficient of variation), affected transit satisfaction at significant levels. Including these objective service attributes provided more explanatory power to the SEM-MIMIC transit satisfaction models. Policy recommendations for improving satisfaction, derived from our results, are: to implement an automatic control system for the number of passengers on Metro platforms (as safety and ease of boarding are critical issues for passengers); and to deploy a comprehensive tactical plan to address CI: determine which happen more often, take actions to minimise them and provide better responsive actions.

     

Environmental charges in airline markets

Over the last two decades many airline markets have been deregulated, resulting in increased competition and use of different types of networks. At the same time there has been an intense discussion on environmental taxation of airline traffic. It is likely that an optimal environmental charge and the effects of a charge differ between different types of aviation markets. In this paper, we derive optimal flight (environmental) charges for different types of airline markets. The first type of market is a multiproduct monopoly airline operating either a point-to-point network or a hub-and-spoke network. The optimal charge is shown to be similar in construction to an optimal charge for a monopolist. We also compare the environmental impact of the two types of networks. Given no differences in marginal damages between airports we find that an airline will always choose the network with the highest environmental damages. The second type of market we investigate is a multiproduct duopoly, where two airlines compete in both passengers and flights. The formulation of the optimal charge is similar to the optimal charge of a single product oligopoly. However, we also show that it is, because of strategic effects, difficult to determine the effects of the charge on the number of flights.     

Multiple hub network and high-speed railway: Connectivity,gateway, and airport leakage

This paper considers the relation between the role of airport as gateway (inter–intra transit airport) and the connectivity between air transport and high-speed rail (HSR) transport to discuss the possibility of a multiple gateway system with HSR. We deal with both international and domestic transport markets in the model analysis. In the international markets, only airlines compete against each other, while in the domestic market airlines and HSR compete against each other. The results suggest that the improvement of connectivity between air and HSR at the airport increases its international passengers, and therefore, that strengthens its role as gateway, for example, gathering more inter–intra transit passengers. However, the results also suggest that the demand of the area which the airport belongs to affects the role of airport as gateway.