A linear programming approach to conjoint measurment and trade-off analysis

There has been increasing attention placed on decomposition techniques such as conjoint measurement and trade-off analysis. Existing algorithms for both approaches use non-linear estimation techniques. In this paper, a linear integration rule is proposed along with a linear programming algorithm which is used to estimate part-utilities by minimizing the sum of the absolute deviations subject to monotonicity constraints. The algorithm was tested on simulated data and empirically. It was found that the algorithm performed well, especially when data are consistent with initial assumptions.     

Calculation of external costs for freight transport

Abstract

The negative impacts of transport are in general associated with costs. These costs are usually denoted as ‘external costs’ or ‘externalities’. This paper presents a tool for calculating external costs for freight transport together with its application to a number of case studies. The categories considered include: air pollution, greenhouse gases, noise, accidents and congestion. Results are presented for a number of different transport alternatives as total costs and divided into categories. The uncertainties in the results are discussed. The assessment of these costs is essential for predicting future transport costs.     

The distribution of crowding costs in public transport: New evidence from Paris

Whilst congestion in automobile traffic increases trip durations, this is often not the case in rail-based public transport where congestion rather leads to in-vehicle crowding, often neglected in empirical studies. Using original survey data from Paris, this article assesses the distribution of comfort costs of congestion in public transport. Estimating willingness to pay for less crowded trips at different levels of in-vehicle passenger density we cannot reject a simple linear relationship between crowding costs and density. We apply our results to the cost-benefit analysis of a recent Parisian public transport project.     

Measuring marginal congestion costs of urban transportation: Do networks matter?

In determining the marginal cost of congestion, economists have traditionally relied upon directly measuring traffic congestion on network links, disregarding any “network effects,” since the latter are difficult to estimate. While for simple networks the comparison of the network-based congestion costs with the link-based ones can be done within a theoretical framework, it is important to know whether such network effects in real large-scale networks are quantitatively significant.In this paper we use a strategic transportation planning model (START) to compare marginal congestion costs computed link-by-link with measures taking into account network effects. We find that while in aggregate network effects are not significant, congestion measured on a single link is a poor predictor of total congestion costs imposed by travel on that link. Also, we analyze the congestion proliferation effect on the network to see how congestion is distributed within an urban area.     

Is telecommuting cheaper than travel? An examination of interaction costs in a business setting

This paper presents an analysis of telecommunications and travel costs for typical business meetings. It is contribution to the debate on the substitutability of telecommunications for travel. An underlying assumption which supports the substitution hypothesis is that the cost of traversing distance through the use of telecommunication is lower than the cost of travelling.This paper addresses the relative cost of telecommunications and travel in conducting interactions. Three factors are assumed to determine these costs: distance, duration of interaction and number of participants. The analysis assumes that cost alone affects choice, and ignores other communication qualities.The relationship between telecommunication and travel costs was tested quantitatively through a case study of typical business meetings in the U.S., based on data from 1988. The results show that travel costs are lower than telecommunication costs for shorter distances, and that the relationship between telecommunications and travel costs differs substantially as a function of number of participants and meeting duration. Because of ongoing rapid changes in the costs of both of these interaction modes, the complex competition between them will continue. The implications of the findings for location decisions and policy-making are discussed.     

Solutions to the optimal network design problem with shipments related to transportation cost

Two versions of an optimal network design problem with shipments proportional to transportation costs are formulated. Extensions of an algorithm developed in prior research for solving these problems are proposed and tested. The performance of the algorithms is found to improve substantially as the dependence of shipments on costs is increased. Moreover, the optimal solutions obtained are unexpectedly robust with respect to a wide range of transportation cost assumptions. These findings could have important computational and policy implications if applicable to larger networks.     

An algorithm for the combined distribution and assignment problem

Much interest has recently been shown in the combination of the distribution and assignment models. In this paper we adopt a generalized Benders' decomposition to solve this combined problem for a system optimized assignment with linear link costs and explicit capacity constraints on link flows. The master problem which is generated is used to show that the combined problem can be viewed as a modified distribution problem, of gravity form, with a minimax instead of a linear objective function. An algorithm for solving the master problem is discussed, and some computational results presented.     

Sharing costs in Swedish road ownership associations

Usually transport systems, and roads in particular, are viewed as public goods. However, this is not always the case. In Sweden a large part of the road system is privately owned. Most of these privately owned roads are rural roads used by farmers and summer cottage owners, or used for forest transport. These roads are mainly provided by ownership associations.An important difference between public roads and these privately owned roads is that all investments- and maintenance decisions are made by the users themselves, who also have to pay the costs, whereas the usual case is that the owners/providers of a road-system are different agents than the users. Here the question is not how to charge the roads but how to split the costs of the roads among the users in an efficient and “fair” way.The motivation of this paper is the practical problem of how such an ownership association can divide the costs for the road network among the members in an efficient and “fair” way. The problem is treated from a game theoretical point of view, making use of the Shapley value. This means that the problem is associated with a game - a mathematical representation of the conflict situation. The Shapley value is a very important solution concept for cooperative games, like the game in this case. For games corresponding to this specific type of problems, it is shown that the Shapley value has excellent properties, such as beeing an element of the core, and beeing very easy to compute.     

Constraint reformulation and a Lagrangian relaxation-based solution algorithm for a least expected time path problem

Using a sample-based representation scheme to capture spatial and temporal travel time correlations, this article constructs an integer programming model for finding the a priori least expected time paths. We explicitly consider the non-anticipativity constraint associated with the a priori path in a time-dependent and stochastic network, and propose a number of reformulations to establish linear inequalities that can be easily dualized by a Lagrangian relaxation solution approach. The relaxed model is further decomposed into two sub-problems, which can be solved directly by using a modified label-correcting algorithm and a simple single-value linear programming method. Several solution algorithms, including a sub-gradient method, a branch and bound method, and heuristics with additional constraints on Lagrangian multipliers, are proposed to improve solution quality and find approximate optimal solutions. The numerical experiments investigate the quality and computational efficiency of the proposed solution approach.     

Analyzing trade-offs between transportation,inventory and production costs on freight networks

The purpose of this paper is to determine optimal shipping strategies (i.e. routes and shipment sizes) on freight networks by analyzing trade-offs between transportation, inventory, and production set-up costs. Networks involving direct shipping, shipping via a consolidation terminal, and a combination of terminal and direct shipping are considered. This paper makes three main contributions. First, an understanding is provided of the interface between transportation and production set-up costs, and of how these costs both affect inventory. Second, conditions are identified that indicate when networks involving direct shipments between many origins and destinations can be analyzed on a link-by-link basis. Finally, a simple optimization method is developed that simultaneously determines optimal routes and shipment sizes for networks with a consolidation terminal and concave cost functions. This method decomposes the network into separate sub-networks, and determines the optimum analytically without the need for mathematical programming techniques.     

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.     

The transit network design problem with elastic demand and internalisation of external costs: An application to rail frequency optimisation

In this paper we examine the transit network design problem under the assumption of elastic demand, focusing on the problem of designing the frequencies of a regional metro. In this problem, investments in transit services have appreciable effects on modal split. Neglecting demand elasticity can lead to solutions that may not represent the actual objectives of the design. We propose four different objective functions that can be adopted to assume demand as elastic, considering the costs of all transportation systems (car, bus and rail) as well as the external costs, and we define the constraints of the problem. Heuristic and meta-heuristic solution algorithms are also proposed. The models and algorithms are tested on a small network and on a real-scale network.     

Substitution of bus for car travel in urban Britain: an economic evaluation of bus and car exhaust emission and other costs

Car exhaust emissions cause serious air pollution problems in many regions and, at a global level, contribute to climate change. Car use is also an important factor in other problems including traffic congestion, road accidents, noise pollution, community severance, and loss of countryside from road building. Forecasts of further increases in car ownership and use have prompted calls for policy-makers to encourage car users to switch to other forms of transport, particularly the bus. The effects of substituting bus for car travel in urban areas are simulated by specifying a spreadsheet model incorporating two types of car (petrol and diesel engine) and three types of bus (mini-, midi- and large bus). Six types of exhaust emission are considered for each vehicle type for the years 1992, 1995 and 1999: carbon monoxide, volatile organic compounds, nitrogen oxides, sulphur dioxide, (small) particulate matter and carbon dioxide. The paper provides a synthesis of monetary estimates of these exhaust emission and other costs. The other costs considered are traffic congestion, fuel consumption, noise pollution, road accidents and road damage. The exhaust emission monetary cost estimates, mainly from the United States and the United Kingdom, are discussed within the context of a sensitivity analysis which allows for changes in parameters such as load factors, emission factors and the individual exhaust emission cost estimates. The simulation results show that substitution of bus for car travel generally decreases the overall costs, particularly the costs of congestion, but increases exhaust emission costs if bus load factors are insufficiently high. In order to reduce exhaust emission costs from car to bus transfer at given load factors, the most effective policy option is to encourage the reduction of particulate emissions from bus engines. In terms of the overall costs, increasing bus load factors by relatively modest amounts can lead to substantial reductions in these overall costs. These results should be regarded as illustrative rather than definitive, given the uncertainties in a number of parameter estimates and the need for further research in areas not covered by the paper.     

The costs and benefits of a nitrogen emission control area in the Baltic and North Seas

The main purpose of this paper is to analyse the socio-economic justification of implementing a Nitrogen Emission Control Area (NECA), starting 2021, for ships in the Baltic Sea and/or the North Sea and English Channel. We analyse the potential for emission reduction, emission control costs, and monetised benefits following the introduction of a NECA. Costs and benefits are compared for 2030. We compile new data on emission control costs for shipping, use the GAINS model for calculations of emission dispersion, and the Alpha-RiskPoll model for estimating monetary values of health impacts. The model results show that costs to conform to the NO_X regulations of a NECA in the Baltic Sea, North Sea or both sea regions would be 111 (100–123), 181 (157–209), and 230 (195–273) million € per year, respectively. Corresponding benefits from reduced emissions are estimated to be 139 (56–294), 869 (335–1882), and 1007 (392–2177) million € per year, respectively. Calculated benefits surpass costs for most scenarios, but less convincingly for a Baltic Sea NECA. Conforming to the NECA regulations by using Liquefied Natural Gas (LNG) propulsion engines is estimated to give the highest net benefits but also the largest variation (costs: 153 (88–238), benefits: 1556 (49–3795) million €/year). The variations are mainly due to uncertainties in the valuation of avoided fatalities and climate impacts. It is concluded that the NECAs for the Baltic and North Seas can be justified using CBA under all but extreme assumptions.     

Operating costs in Norwegian toll companies: a panel data analysis

The objective of this paper is to ease the planning of new toll projects by providing estimates of operating costs, and to help us make better informed decisions about the design of toll collection systems. To do so we use panel data for Norwegian toll companies to estimate average cost functions. The main results can be summarised as follows. We provide evidence of very important unexploited economies of scale. The estimated cost curves are very steep for traffic levels below the sample mean, and become almost entirely flat over a wide range above the sample mean. A higher share of vehicles using on board units will significantly reduce average costs. Competitive tendering will significantly reduce average operating costs by as much as 25%. Our results also suggest that increased number of lanes, higher debt and passenger charging will increase average operating costs whereas average operating costs are lower for toll cordons compared with other projects.

An econometric analysis of motorway renewal costs in Germany

The analysis of motorway renewal costs presented in this paper was driven by two research questions: First, to analyse the economic process of motorway renewal work and to identify whether there exist economies of scale; and second to identify the influence of traffic volume on renewal costs and to derive an estimate of marginal infrastructure costs as part of optimal road user charges. The analysis is based on cross-sectional data for motorway renewal costs and traffic volume in Germany during the period 1980–1999. Two translog models were estimated, each of them including the factor input prices for labour, material and capital, and a set of regional dummy variables as well as dummy variables for the type of material used for renewal. The first model includes in addition to these variables the sqm of renewed road as explanatory variable. The second model was constructed to analyse the relationship between traffic volume and renewal costs and contains the average annual daily traffic volume of trucks and passenger cars as independent variables. Two main results were derived from the models: First, motorway renewal work is characterised by substantial economies of scale. Second, the relationship between renewal costs and traffic volume is expressed by a cost elasticity, i.e., the ratio between marginal and average costs, which ranges from 0.05 up to 1.17 with a digressive increase of marginal costs.     

How much do people value the environment?

The selection and evaluation of road schemes through the Leitch framework is based on a combination of cost-benefit analysis and environmental impact assessment. Both techniques involve the definition and valuation of a number of costs and benefits. These costs and benefits are defined and valued in isolation to each other so that we know virtually nothing about the relative valuation that people assign to different types of costs and benefits which might affect them directly or indirectly. This paper outlines the development of a method which allows people to conceptualise the costs and benefits of a road scheme in their own terms and then to rank schemes in relation to those costs and benefits. This method is based upon an interview process involving the use of repertory grid technique. The information from the repertory grid technique is used as a sound basis for determining trade-offs between attributes and for attempting to obtain monetary valuations of different project attributes. A number of exploratory interviews are reported which outline some of the difficulties with a number of the survey features including the choice of case-study, interviewer and information biases and sample and non-response biases. Various ways of dealing with these difficulties are discussed.     

Effects of switching costs on customer attitude loyalty to an airport in a multi-airport region

The purpose is to analyze impacts of switching costs on customer attitude loyalty to an airport operator in a Norwegian multi-airport region. A sample of 167 respondents is analyzed by a structural equations modelling approach. Irrespective of customers’ perceptions of switching costs, service quality seems to be the most important customer loyalty driver. For low switching costs customers flight offers are also an important loyalty driver. For high switching costs customers facilities are important. An anticipated reduction in switching costs due to improvements in the regions’ infrastructure thus implies that more attention should be paid to an upgrading of the flight offers in order to create more airport loyalty in future. This may also have some interesting policy implications, which is briefly discussed in the paper.     

External costs of intercity truck freight transportation

From a societal perspective, it is desirable for all transportation users to pay their full social (private and external) costs. We estimate four general types of external costs for intercity freight trucking and compare them with the private costs incurred by carriers. Estimated external costs include: accidents (fatalities, injuries, and property damage); emissions (air pollution and greenhouse gases); noise; and unrecovered costs associated with the provision, operation, and maintenance of public facilities. The analysis reveals that external costs are equal to 13.2% of private costs and user fees would need to be increased about threefold to internalize these external costs.     

Capacity investment model for airport facilities under demand uncertainty

This paper addresses strategic airport facility planning under demand uncertainty. Existing studies are improved by (1) allowing capacity contraction and (2) adopting more flexible delay functions. A mixed‐integer nonlinear program, which incorporates scale economies in construction, time value of money, nonlinear congestion effect, and other factors, is proposed for optimizing the capacity expansion/contraction decisions over time for multiple airport components. The stochastic problem is converted into its deterministic equivalent because the number of demand scenarios considered is finite. A discrete approximation technique is used to remove the nonlinearities. Numerical studies are presented to demonstrate the capability of the proposed model and the computational efficiency of the solution method. The “Flaw of Averages” due to faulty decisions based on the average future condition is illustrated, and trade‐offs among various costs are discussed in the numerical analyses. Copyright © 2016 John Wiley & Sons, Ltd.