Measuring the benefits derived from a transportation investment — a comment

Because an expansion of roads will shift the demand curves for interdependent roads, it may appear difficult to determine the consumer surplus generated by road projects. An extensive literature discusses different measures of consumer surplus, and the conditions under which the different measures give consistent answers. Little attention, however, has been given to a more fundamental problem: under what conditions does consumer surplus measure the benefits of an investment. We discuss both these issues, and explain the close relationship between the conditions guaranteeing the uniqueness of a measure of consumer welfare, and its usefulness in evaluating road projects. No uniqueness problem arises if different roads connect the same origin and destination; consumer surplus can then be measured by use of an aggregate demand curve.     

The structure of intercity travel demands in Canada: Theory tests and empirical results

This paper presents results of an econometric study study of intercity travel demands in Canada, 1961–1976. A translog form of reciprocal indirect utility function is used to test the structure of preferences in five demand sectors: three travel modes, goods and other services. Travel sector preferences are found to be time- and season varying but independent of average weekly work hours. The aggregate results indicate that the demands for all three passenger modes are price-elastic; bus and rail exhibit moderate complementarity, while rail and air are weakly complementary. The most important result derived from our tests of separability was that the demand system for the three passenger modes is inextricably tied to the rest of the economy, and therefore, may not be studied in isolation from the goods and other services sectors.     

Economical welfare maximisation analysis: assessing the use of existing Park-and-Ride services

This paper assesses travellers’ responses to the use of existing Park-and-Ride (P&R) services based on an economical welfare maximisation approach. Specifically, the paper presents a modelling framework to estimate consumer surplus and producer surplus (business profits) on the basis of modal choice probabilities. The paper draws on evidence from Stated Preference surveys conducted around two P&R sites in Sapporo, Japan, where P&R services occupy a modest market space. Overall, the results suggest that business profit increases when economical welfare is maximised, as a consequence of increased demand. It is also shown that P&R choice is not only influenced by parking fees, but also by the fares and other attributes of alternative transportation modes. Accordingly, the interactions of P&R with alternative transportation modes should be taken into consideration in any strategic transportation policies oriented towards motivating sustainable transport mode choices.     

Ramp meters on trial: Evidence from the Twin Cities metering holiday

Ramp meters in the Twin Cities have been the subject of a recent test of their effectiveness, involving turning them off for eight weeks. This paper analyzes the results with and without ramp metering for several representative freeways during the afternoon peak period. Seven performance measures: mobility, equity, productivity, consumers’ surplus, accessibility, travel time variation and travel demand responses are compared. It is found that ramp meters are particularly helpful for long trips relative to short trips. Ramp metering, while generally beneficial to freeway segments, may not improve trip travel times (including ramp delays). The reduction in travel time variation comprises another benefit from ramp meters. Non-work trips and work trips respond differently to ramp meters. The results are mixed, suggesting a more refined ramp control algorithm, which explicitly considers ramp delay, is in order.     

Modal split and urban public transport management in an Eastern European country

When public transport is the main means of travel in urban areas, management and planning are easy and the main objective can be to minimise costs for the demand available, i.e. maximise profit. However when public transport faces competition from other modes of transport, and activities can be undertaken in a variety of locations, then the management and planning of public transport services is considerably more difficult.This paper examines a methodology for representing consumer behaviour when faced with alternative travel decisions, in order to identify the demand for public transport and to help operators adjust services and prices to maximise demand, when considering people's disposable income, the alternative modes and activity locations available. From this it is possible to devise criteria for maximising consumer surplus in a city, taking into account social benefits.     

Modeling the effects of traveler information on freeway origin–destination demand prediction

The primary focus of this research is to develop an approach to capture the effect of travel time information on travelers’ route switching behavior in real-time, based on on-line traffic surveillance data. It also presents a freeway Origin–Destination demand prediction algorithm using an adaptive Kalman Filtering technique, where the effect of travel time information on users’ route diversion behavior has been explicitly modeled using a dynamic, aggregate, route diversion model. The inherent dynamic nature of the traffic flow characteristics is captured using a Kalman Filter modeling framework. Changes in drivers’ perceptions, as well as other randomness in the route diversion behavior, have been modeled using an adaptive, aggregate, dynamic linear model where the model parameters are updated on-line using a Bayesian updating approach. The impact of route diversion on freeway Origin–Destination demands has been integrated in the estimation framework. The proposed methodology is evaluated using data obtained from a microscopic traffic simulator, INTEGRATION. Experimental results on a freeway corridor in northwest Indiana establish that significant improvement in Origin–Destination demand prediction can be achieved by explicitly accounting for route diversion behavior.     

Valuation of users’ benefits in transport systems

Transport projects involve costs and benefits. Benefits to users appear in the form of more and/or better trips. Once the neoclassical idea of demand is accepted, the variation of utility levels underlie the measurement of benefits. In the evaluation process, benefits have to be compared with costs, and this can be done converting utility into monetary units. This paper deals with the treatment of this problem, starting with the general relation among utility, demand and the various forms of consumers’ surplus, to move further into the particular forms that these relations take in the transport field. The rule‐of‐a‐half is followed from the intuitive initial justification to a strict (and general) analytical derivation. More rigorous forms of users’ surplus variation are then presented for fairly general cases, including both aggregate and disaggregate transport demand models, emphasizing the manner in which welfare measures are derived in each case. Discussion is centred around the comparative advantages and limitations of available approaches, searching for improvements in demand formulation and benefits measurement.     

Evaluating the public investment mix in US freight transportation infrastructure

This research empirically evaluates the public sector investment in the US freight transportation infrastructure. In particular, the infrastructures to support the two most comparable modes of freight transportation – highway and intermodal rail – are examined as alternatives for public fund allocation. Indicators for public sector transportation infrastructure investment mix are established based on financial analysis of both private and social costs and benefits, as well as the propensity of freight shippers to utilize such infrastructures. The research results in recommendations for the aggregate allocation of public funds in the US based on these indicators. We find that approximately a quarter of truck freight could be handled at a 25% lower cost if rail infrastructure to support it existed. Because an additional 80% reduction in social costs could be achieved through this modal conversion, the public sector is a critical participant in creating a more efficient transportation infrastructure.     

Testing probabilistic discrete choice models of travel demand by comparing predicted and observed aggregate choice shares

Probabilistic discrete choice models of travel demand often are tested for the presence of specification errors by comparing the models' predictions of aggregate choice shares in population strata with observed shares. A model is rejected as misspecified if the differences between its predictions and the observations are judged too large. This judgement usually is made on intuitive grounds without use of formal statistical methods and, therefore includes no systematic method for distinguishing the effects of specification errors on differences between predictions and observations from those of random sampling errors. This paper represents formal statistical tests for comparing predicted and observed aggregate chioce shares in population strata and reports the results of an investigation of the power of the tests. The test statistics are asymptotically χ² disturbed when the model being tested is correctly specified. The results of the power investigation suggests that greater power is obtained (i.e. there is ability to detect misspecified models) when all of the available data are used for both parameter estimation and specification testing than when the available data are divided into separate estimation and test data sets. Specification tests based on comparisons of predicted and observed aggregate choice shares appear to have less power than do likelihood ratio and likelihood ratio index specification tests when the alternative models required by the latter tests are correctly or approximately correctly specified. However, tests based on comparisons of predicted and observed shares ca have greater power than the other tests when the alternative models are seriouslymisspecified.     

On some traffic equilibrium theory paradoxes

We consider the asymmetric equilibrium problem with fixed demands in a transportation network where the travel cost on each link may depend on the flow on this as well as other links of the network and we study how the travellers' cost is affected by changes in the travel demand or addition of new routes. Assuming that the travel cost functions are strongly monotone, we derive formulas which express, under certain conditions, how a change in travel demand associated with a particular origin-destination (O / D) pair will affect the travelers' cost for any O / D pair. We then use these formulas to show that an increase in the travel demand associated with a particular O / D pair (all other remaining fixed) always results in an increase in the travelers' cost on that O / D pair, however, the travelers' cost on other O / D pairs may decrease. We then derive formulas yielding, under certain conditions, the change in travelers' cost on every O / D pair induced by the addition of a new path. These can be used to determine, whether Braess' paradox occurs in the network. We then show that when a new path is added, the travelers' cost associated with the particular O / D pair joined by this path will decrease (hence Braess' paradox does not occur) if a test matrix is positive semidefinite.     

Fundamentals of discrete multimodal choice modelling

Abstract

In this paper an overview is given of the most relevant issues relating to the application of multimodal choice models, with particular emphasis on disaggregate modal split models. The paper considers questions of data, such as type of data, alternative sampling strategies and problems of measurement; and modelling issues, such as model specification and estimation, including a good presentation of the statistical techniques'available. The paper also addresses the aggregation problem, which lies at the heart of one of today's most hotly contested debates: whether to use aggregate or disaggregate models for policy analysis, and in which circumstances.     

Some evidence of transit demand elasticities

This paper draws together empirical evidence from a variety of sources about the magnitudes of transit price elasticities and cross-elasticities. A number of different practical measures of demand elasticity are first defined and some expectations about magnitude are discussed. Evidence is then collated from the analysis of transit operating statistics, from experience in demonstration projects and from attempts to develop cross-sectional models of demand and modal choice.In general, all of the limited evidence available suggests that transit demand is inelastic with respect to money price. Typically, ridership is significantly more sensitive to changes in the level of service (particularly door-to-door journey time) than to changes in fare, although service elasticities also are usually numerically less than unity.In broad terms, short-run direct fare elasticities are characteristically observed to lie within the range of -0.1 to –0.7. A more precise value in a particular instance will depend on a variety of factors in ways which largely support a priori notions. Thus in very large cities, central city areas, at peak hours, and in other circumstances where the prices of alternative modes are high, transit fare elasticities are usually numerically at the lower end of the range.Estimates of cross-elasticities (representing the volumes of transit traffic diverted to other modes by transit price increases) are much harder to come by, and in fact only a few very uncertain estimates are presented here.This paper is a condensation of an Urban Institute Working Paper of the same title (WP 708-52, November 1971). Opinions expressed are those of the author and do not necessarily represent the views of The Urban Institute or its sponsors.     

Travel demand estimation risk for high‐speed railway transport considering travel price competition

The Hokkaido Shinkansen (HS) bullet train line is under consideration to open in 2020. In this study, travel demand is estimated for the HS. Because some explanatory variables that are used for such estimation can have estimation errors, travel demand estimation risk is also calculated. In addition, because the HS can compete with airlines for modal share, the impacts of travel price competition (TPC) on the travel demand and the demand estimation risk are also estimated. In this study, the travel demand estimation risk is measured as the variance or the SD of the stochastic travel demand. The analysis reveals the following: the modal share of HS is 16% less when TPC is considered than when it is not considered; TPC causes the travel demand estimation risk to decrease; the probabilities of the HS operating at a deficit with and without consideration of TPC are calculated as 31.2% and 1.25%, respectively, and the increase in the mean consumer surplus accruing from the HS is calculated as JPY 47bn/year ($US588m/year) without TPC and as JPY 66bn/year ($US825m/year) with TPC. Copyright © 2012 John Wiley & Sons, Ltd.     

Attitudinal and situational variables influencing urban mode choice: Some empirical findings

A mode choice decision structure incorporating traveler attitudes toward modes and situational constraints is investigated. The major hypothesis tested is that mode choice is determined primarily by situational constraints, such as auto ownership and income, secondly by the quality of alternative modes.The structure of the mode choice process is analyzed with respect to (1) applicability of certain choice criterion forms; (2) psychological weighting of modal attributes in the choice criterion; (3) strength of logit, probit, and discriminant functional forms; (4) the relative strength of socio-economic and attitudinal variables in predicting mode choice. An evaluation is made of 50 binary choice models fitted to a sample of 471 randomly drawn urban travelers. Results indicate that (1) the four choice criterion forms tested are all about equal in predictive strength; (2) psychological weighting has no effect on model strength, but does influence which modal attributes appear to determine choice; (3) the three functional forms tested are all about equal in strength; (4) situational factors account for 80–90% of variation explained by the models, attitudes toward modes 10–20%, thus confirming the primary hypothesis. Implications of these results for mode choice modeling and transit planning are discussed.This paper summarizes current research at the New York State Department of Transportation on the motivations and causes of travel behavior. Complete findings are available in Hartgen (1973).     

The impact of fuel availability on demand for alternative-fuel vehicles

We study the impact of fuel availability on demand for alternative-fuel vehicles, using data from a survey of potential car buyers in Germany. The survey was conducted as a computer-assisted personal interview and included a choice experiment involving cars with various fuel types. Applying a standard logit model, we show that alternative fuel availability influences choices positively, but its marginal utility diminishes with supply. Furthermore, we derive consumers’ marginal willingness-to-pay for an expanded service station network. The results suggest that a failure to expand the availability of alternative fuel stations represents a significant barrier to the widespread adoption of alternative-fuel vehicles.     

Further evidence on the temporal stability of disaggregate travel demand models

Current evidence on the transferability of disaggregate travel demand models is inconclusive. Adding to this body of research, the present analysis focuses upon the temporal characteristics of work trip behavior in the San Francisco Bay Area. Using before and after data sets associated with the BART Impact Travel Study, multinomial logit models of work trip modal choice are estimated. The results indicate that the general form and the coefficient estimates of a pre BART model are transferable in time. Moreover, when updated to reflect BART's presence, the model's predictive success and its implied elasticity measures are generally accurate, relative to those implied by reestimating the entire model on post BART data. Finally, as economic theory would predict, elasticity measures of the service related variables were found to increase over time.     

Anticipating new-highway impacts: Opportunities for welfare analysis and credit-based congestion pricing

Pricing of roadways opens doors for infrastructure financing, and congestion pricing seeks to address inefficiencies in roadway operations. This paper emphasizes the revenue-generation opportunities and welfare impacts of flat-tolling schemes, standard congestion pricing, and credit-based congestion pricing policies. While most roadway investment decisions focus on travel time savings for existing trips, this work turns to logsum differences (which quantify changes in consumer surplus) for nested logit specifications across two traveler types, two destinations, three modes and three times of day, in order to arrive at welfare- and revenue-maximizing solutions. This behavioral specification is quite flexible, and facilitates benefit-cost calculations (as well as equity analysis), as demonstrated in this paper.The various cases examined suggest significant opportunities for financing new roadway investment while addressing congestion and equity issues, with net gains for both traveler types. Application results illustrate how, even after roadway construction and maintenance costs are covered, receipts may remain to distribute to eligible travelers so that typical travelers can be made better off than if a new, non-tolled road had been constructed. Moreover, tolling both routes (new and old) results in substantially shorter payback periods (5 versus 20 years) and higher welfare outcomes (in the case of welfare-maximizing tolls with credit distributions to all travelers). The tools and techniques highlighted here illustrate practical methods for identifying welfare-enhancing and cost-recovering investment opportunities, while recognizing multiple user classes and appropriate demand elasticity across times of day, destinations, modes and routes.     

September 11 and the World Airline Financial Crisis

Abstract

This paper analyses the effectiveness of policy measures aimed at triggering a modal shift in the freight transport market. The analysis is based on the inventory‐theoretic framework that studies modal choice from a business logistics viewpoint. The crux of the inventory‐theoretic approach lies in the fact that explicit attention is paid to all costs in the supply chain that are affected by the choice of transport mode. After a brief literature review on the inventory‐theoretic framework, the framework is used to calculate the market shares of different freight transport modes for a hypothetical transport market. In a second step, the impact of some policy measures on the market shares of the transport modes is calculated. By way of illustration, the analysis is applied to the market for container transport from a seaport to its hinterland. It is shown that a combination of certain policy measures can lead to significant modal shifts from road transport to intermodal transport.     

Identification and diagnosis of specification errors in the multinomial logit model

Multinomial logit models of travel demand are subject to a variety of specification errors that can severely affect the accuracy the models' forecasts. This paper describes some of the important sources of specification errors in logit models, presents numerical illustrations of the errors' effects on forecasts of travel behavior, and evaluates the ability of several informal and formal statistical procedures to identify and diagnose the errors. Among the tests considered, the most powerful are a test against a probit model and the McFadden, Tye and Train (1976) test based on the universal logit method. The least powerful tests are a test based on extrapolating the logit model and informal tests based on examination of the signs, t-statistics and ratios of the estimated parameters of the logit function.     

Direction dependent prices in public transport: A good idea? The back haul pricing problem for a monopolistic public transport firm

Markets for transport are often characterised by unequal demand in both directions: every morning during peak hours the trains are crowded while moving towards the direction of large cities, whereas they may be almost empty in the other direction. In this paper we discuss the implications of these imbalances for price setting of transport firms. From the viewpoint of economic theory, two regimes can be distinguished: one where – owing to price discrimination – the flows are equal, and one where unequal flows are the result. Special attention is paid to the case where the transport firm does not apply price discrimination, as is the case with most railway firms in Europe. We find that in the case of substantial joint costs, the introduction of price discrimination not only leads to an increase of profits, but also to positive effects on consumer surplus. This result differs from the standard result in the literature on industrial economics. The standard result purports that with linear demand functions price discrimination has a negative impact on the welfare of the average consumer and that this negative impact dominates the positive effect on profits of the producer.