Forthcoming:
Recently Published:
2023:
Jha, Akshaya and Frank A. Wolak. (2023). “Can Forward Commodity Markets Improve Spot Market Performance? Evidence from Wholesale Electricity.” American Economic Journal: Economic Policy. 15(2): 292-330. May 2023. Link to paper Abstract
Forward markets are believed to aggregate information about future spot prices and reduce the cost of producing the commodity. We develop a measure of the extent to which forward and spot prices agree in markets with transaction costs. Using this measure, we show that day-ahead prices better reflect real-time prices at all locations in California’s electricity market after the introduction of financial trading. We then present evidence suggesting that operating costs and input fuel use fell after the introduction of financial trading on days when the nonconvexities inherent to the production and transmission of electricity are especially relevant.
Friedt, Felix L. (2023). “Ports, Trade, Employment, And Local Factor Prices: Empirical Evidence Based on Disaster-induced Rerouting of International Trade.” Journal of Transport Economics and Policy. 57(1):2-21. October 2022. Link to paper Abstract
While impact studies of port infrastructure investments are common, effects of changes in their utilisation are much less understood. Leveraging the exogenous variation in shifting trade routes due to Hurricane Katrina, I estimate port utilisation effects on otherwise unaffected Florida port communities. The instrumental variable approach embedded in a system of theoretically motivated estimation equations provides sound identification of the urban economic impact of international cargo shipments, and suggests a 10 per cent increase in seaport services raises factor prices and employment by 0.46–0.69 per cent. Aligning with the theory, effects are driven by transportation and traded goods-producing sectors.
2022:
Weber, Bryan and Paolo Cappellari. (2022). “Assessing the Impact of Ferry Transit on Urban Crime.” Urban Affairs Review. December 2022. Link to paper Abstract
In 2017, over a dozen ferry stations were introduced across the NYC region on multiple dates, serving roughly 10,000 customers per day. We measure a negative association between these stations and crime reduction, a significant decline of 11 crimes per week (11%) at a one-mile radius around the stations, and about 1 crime per week (32%) over the extremely narrow base of crime at the station itself. We also find no evidence of crime displacement. This study first utilized a traditional difference-in-differences methodology, but we also used a new tool, the causal random forest. Both methodologies are compared and contrasted with an eye toward user understanding. The results of our analysis are consistent and coherent across all the different methodologies, with the causal random forest finding more pronounced effects by taking into account two major factors: the propensity of the regions for treatment, and the interaction between elements of interest.
Cappellari, Paolo and Bryan Weber. (2022). “An analysis of the New York City traffic volume, vehicle collisions, and safety under COVID-19.” Journal of Safety Research. 83: 57-65. December 2022. Link to paper Abstract
Introduction and Method: We use the arguably exogenous intensity of COVID-19 as an instrument in order to study the relationship between traffic volume and vehicle collisions in a large metropolitan area. We correlate data from multiple sources and consider a time interval ranging from about one year before to one year after the pandemic breakout, which allows to account for preexisting seasonal patterns as well as the disruption brought by the pandemic. Results: We identify that increased traffic volume is associated with significantly more collisions with a robust elasticity varying between 1.2 and 1.7. At the same time, higher traffic volumes are associated with a significant reduction in casualties. Conversely, low traffic volumes are associated with high speeds and with particularly dangerous collisions. In terms of social cost, we separately calculated the cost of property damage and casualties. We measured that the reduction in the per-day social cost of collisions during the COVID-19 period is approximately $453,000 in property damage. However, the increase in casualties from collisions at lower traffic volumes are worth approximately $2.6 million in injuries and fatalities, entirely offsetting any benefit from reduced collisions. Practical Applications: This research provides valuable insights that policy makers may take into consideration when shifting traffic volume in relation to social cost and safety, such as congestion taxes.
Friedt, Felix L. (2022). “Ports, Trade, Employment, And Local Factor Prices: An Urban Equilibrium Theory.” Journal of Transport Economics and Policy. 56(4): 381-398. October 2022. Link to paper Abstract
In this study, I develop a multi-sector urban equilibrium model of port cities that allows us to consider the disaggregated employment and factor price effects of domestic and international transportation. The model resolves the theoretical ambiguity of aggregate urban equilibrium effects in response to changes in the utilisation of port infrastructure by considering the opposing industry-specific dynamics across manufacturing, transport, and service sectors. The research highlights the simultaneity between trade, transport, and the urban economy, and delivers an estimable system of equations to overcome this issue.
Sun, X., S. Wandelt and A. Zhang (2022), “Air transportation as a puzzle piece of COVID-19 in Africa?” Research in Transportation Business and Management, 43, 100780. June 2022. Link to paper Abstract
COVID-19 has hit our society hard, with more than 242 million cases reported worldwide and more than 4.9 million directly related fatalities. The role of Africa throughout the pandemic has been puzzling, since the African continent seems to have gone through the pandemic better than other continents; clearly better than predicted by the public during the emergence of COVID-19 one year ago. While several factors have been proposed in the literature to explain the unexpected role of Africa, including a relatively young population, more historical-driven preparedness to other types of coronavirus and diseases, and a limited amount of testing, the puzzle is not considered to be solved. In this study, we aim to answer the question whether air transportation indicators can support us in explaining the evolution of COVID-19 in Africa? Using flight data for the year 2020, we explore how changes in the air transportation system correlate with evolution of epidemiological indicators. Our results suggest that air transportation could indeed play a critical role for the spread of COVID-19 in Africa as well. Overall, we hope that our analysis contributes towards a better understanding of COVID-19 and the role air transportation plays in an under-researched region of the world.
Kidokoro, Y. and A. Zhang (2022), “Airport cities and social welfare,” Transportation Research Part B: Methodological 158, 187-209. April 2022. Link to paper Abstract
This paper is concerned with the development of airport cities and social welfare. We analyze a typical non-aeronautical service of an airport, namely, airport shopping malls, by using a novel model that incorporates an endogenous change in varieties sold at airport malls and their substitutability with downtown stores. Larger airports do have more varieties of shops whose space can be changed by development. Our main results show that, first, airport malls developed by a local government or a profit-maximizing airport are too large as compared to the socially optimal size, because either entity disregards a decrease in profit at downtown stores when deciding on the size of airport malls. Second, the planner can attain the social optimality with the use of Pigouvian subsidies, even if it delegates its decision making to a local government or a profit-maximizing airport. Third, a local government or a profit-maximizing airport has an incentive to construct an airport that is too far away from downtown (or, has little incentive to improve airport access to/from downtown). The planner can nevertheless delegate its decision on airport location (or, airport access conditions) to either entity by using Pigouvian subsidies.
Kidokoro, Y. and A. Zhang (2022), “Single-till regulation, dual-till regulation, and social welfare,” Journal of Transport Economics and Policy 56(2), 190-216. April 2022. Link to paper Abstract
This paper analyses single-till and dual-till regulations in terms of social welfare. We clarify two conditions to determine which regulation yields a higher welfare. The first condition is whether the solutions under welfare maximisation yield positive or negative regulatory profits. The second condition is whether the profit of non-core business is positive or negative. Specifically, if the solution under unconstrained welfare maximisation yields a positive (negative) regulatory profit, then the dual-till (single-till) regulation yields a higher welfare, as long as the profit of non-core business is positive. If the profit of non-core business is negative, the above results are reversed.
2021:
Friedt, Felix L. and Jeffrey P. Cohen. (2021). “Perception vs. Reality: The Noise Complaint Effect on Home Prices.” Transportation Research Part D: Transport and Environment. 100. November 2021. Link to paper Abstract
Intercity air transportation has grown rapidly in recent decades and creates significant noise pollution that affects health. Previous research quantifies the losses that are capitalized into home values. Much research relies heavily on spatially restrictive noise contour plots to identify the house price discounts and determine economic damages. We break new ground by investigating whether residential noise complaints can offer insights on aircraft noise pollution and housing price impacts experienced by residents near Minneapolis-Saint-Paul International Airport outside of contour boundaries. Our findings indicate noise complaints are a reliable measure of residential noise annoyance and have a significant adverse effect on home prices extending nearly twice as far (10 km) as contours. Reevaluating economic damages based on our results indicates contour-based calculations severely underestimate aircraft-noise-pollution-induced losses incurred by homeowners and suggests $154 million of $167 million in post-abatement damages are borne by residents located outside the regulated Minneapolis contour area.
Friedt, Felix L. (2021). “Natural Disasters, Aggregate Trade Resilience, and Local disruptions: Evidence from Hurricane Katrina,” Review of International Economics. 29(5): 1081-1120. November 2021. Link to paper Abstract What drives the resilience of international trade against increasingly destructive natural disasters? In this study, I investigate the dynamics and spatial distribution of Hurricane Katrina’s trade effects across United States infrastructure and break new ground on the mechanisms underlying the static and dynamic trade resilience. Analyzing port‐level data, I find that ports subject to this calamity experience significant and lasting trade reductions, while export and import shipments handled by the adjacent ports exhibit significant increases. Interestingly, the duration of this rerouting effect is persistent for 8 years uncovering novel path dependencies and providing important policy insights in light of recent events.
Zhou, Zhengyi and Anming Zhang. (2021). “High-speed Rail and Industrial Developments: Evidence from House Prices.” Transportation Research Part A: Policy and Practice. 149: 98-113. July 2021. Link to paper Abstract
With unique datasets, this paper studies the distributional impact of high-speed rail (HSR) on industrial developments by examining the house price premium of industrial parks in two important core-periphery city pairs of China: Shanghai-Suzhou and Beijing-Langfang. We find that in core cities, the premium of service industrial parks (SIPs) has grown faster near HSR stations, while that of manufacturing industrial parks (MIPs) has grown slower near HSR stations. In periphery cities, however, the premium of SIPs has grown slower near HSR stations. Moreover, the premium of MIPs has grown faster near HSR stations of Suzhou. The results suggest that HSR facilitates a “spillover effect” between the core and peripheries for the manufacturing industry, but a “siphon effect” for the service industry. City-level GDP analysis for the two industries delivers consistent results. Our findings shed light on the underlying reason for the spatial variation in the economic impacts of HSR.
Ho, Chun-Yu, Patrick McCarthy, and Yanhao Wang. (2021). “Competition and countervailing power: Evidence from the China Eastern and Shanghai Airlines merger,” Journal of Air Transport Management. 91. 101990. March 2021. Link to paper Abstract This paper examines the motives and effects behind the horizontal merger between China Eastern and Shanghai Airlines in 2009. We develop testable hypotheses, incorporating into a unified framework the two merging airlines, their domestic and international competitors, and relevant airports along the supply chain. We employ an event study methodology and show that domestic competitors gain whereas international competitors lose. Our results suggest that the sources of gain for the merging firms are market power in domestic markets and efficiency improvement in international markets. Further, as a hub for the merged airline, Shanghai Airport experienced positive abnormal returns. Our results do not support the hypothesis that the merged airline gains countervailing power towards airports. Our event study findings are robust to alternative estimation periods and samples, and are consistent with analyst forecasts and long-run operating performances
Ma, Wenliang, Anming Zhang, Yahua Zhang and Shiteng Xu (2021), “The growing influence of low-cost carriers in Northeast Asia and its implication towards a regional single aviation market,” Journal of Air Transport Management. 91, 101994. March 2021. Link to paper Abstract This paper provides an overview of the development of the low-cost carrier (LCC) sector in China, Japan, and South Korea. It is the first paper that documents LCC contributions to the passenger traffic and cheaper fares in Northeast Asia (NEA)’s intra-markets. We argue that a single aviation market can facilitate the growth of the LCC sector, which in turn will make a significant contribution to the NEA connectivity, mobility, and integration. In addition, with a single aviation market, NEA countries can adopt a proactive, unified approach in negotiating air transport agreements with the major aviation partners to maximize the interests of this region as a whole, which will further provide valuable growth opportunities for the LCCs.
Felix L. Friedt and Jeffrey P. Cohen. (2021). “Valuation of Noise Pollution and Abatement Policy: Evidence from the Minneapolis-Saint Paul International Airport.” Land Economics. 97(1): 107-136. February 2021. Link to paper Abstract Aircraft noise pollution has adverse physical and mental health effects that are capitalized in the affected home values. We contribute to the literature estimating these noise discounts by our novel identification strategy that analyzes the “treatment effect” of two local government subsidized soundproofing initiatives near the Minneapolis-Saint Paul International airport. Combining a repeat-sales sample with data on aircraft noise pollution (1990-2014), we find a causal noise discount of around $25,000 per sale of noise-affected, but abatement-ineligible, properties, whereas abatement-eligible homes experience a negligible effect post soundproofing indicating a return on abatement investments as a high as 40% in Minneapolis.
Arblaster, Margaret and Chrystal Zhang. (2021). “Independent or self-regulation: An assessment of economic oversight of air traffic management in Australia and New Zealand,” Utilities Policy, 68. 101155. February 2021. Link to paper Abstract The regulatory governance of two government-owned, commercialised, monopoly air navigation service providers in Australian and New Zealand is assessed. Economic oversight by an independent regulator in Australia is compared to self-regulation in New Zealand. The Stern and Holder (1999) evaluation framework is applied and user assessments are considered. Both models meet the attributes of sound regulatory governance in most respects. Significant changes in the industry environment indicate that regulatory governance should be reassessed, including with regard to linkages between price regulation and service delivery.
2020:
Sun, Xiaoqian, Sebastian Wandelt and Anming Zhang (2020), “How did COVID-19 impact air transportation? A first peek through the lens of complex networks,” Journal of Air Transport Management. 89, 101928. October 2020. Link to paper Abstract This paper proposes a decomposition of sources of gain of airline mergers. Economic analysis of horizontal mergers often attributes the gains of the merger to market power and productive efficiency effects. We adopt a Williamson framework to propose a decomposition analysis quantifying the relative importance of these two effects for airline mergers. First, we use an event study to compute the market power and productive efficiency wealth effects in airline mergers. Second, we use the airline’s operating statistics to compute the proportion of profit gain due to market power and productive efficiency. We then apply those proportions to decompose the sources of wealth effects from the event study. In a case study, we apply this methodology to analyze the horizontal merger between China Eastern and Shanghai Airlines in 2009. Our results find that improved productive efficiency contributed about four-fifths to the merged airline’s increased wealth, while increased market power contributed about one-fifth.
Ho, Chun-Yu, Patrick McCarthy, and Yanhao Wang. (2020). “Decomposing Sources of Gain from Airline Mergers: A Model and Case Study from China.” Research in Transportation Economics. 84, December 2020. Link to paper Abstract
This paper proposes a decomposition of sources of gain of airline mergers. Economic analysis of horizontal mergers often attributes the gains of the merger to market power and productive efficiency effects. We adopt a Williamson framework to propose a decomposition analysis quantifying the relative importance of these two effects for airline mergers. First, we use an event study to compute the market power and productive efficiency wealth effects in airline mergers. Second, we use the airline’s operating statistics to compute the proportion of profit gain due to market power and productive efficiency. We then apply those proportions to decompose the sources of wealth effects from the event study. In a case study, we apply this methodology to analyze the horizontal merger between China Eastern and Shanghai Airlines in 2009. Our results find that improved productive efficiency contributed about four-fifths to the merged airline’s increased wealth, while increased market power contributed about one-fifth.
Friedt, Felix L. and Wesley W. Wilson (2020). “The Economic Impact of Seaport and Other Infrastructure Investments and Leakages: A Literature Review.” Journal of Transport Economics and Policy 54(4), pp. 201-243, October 2020. Link to paper Abstract
This survey is of the growing body of research investigating the economic development effects of transport infrastructure expenditures, and seaport investments in particular. This literature employs a variety of methods, and draws varying conclusions. Our review suggests that the estimated investment effects are generally positive, and that there is considerable disagreement on the magnitude of the resulting productivity and employment benefits. The estimated impacts of seaport investments are particularly contentious. We identify cross-border investment benefit leakages as one potential determinant underlying this controversy, and find that the sparse literature on leakages delivers key insights that deserve more attention going forward.
Hughes, Jonathan and Ian Lange. (2020). “Who (Else) Benefits from Electricity Deregulation? Coal prices, natural gas and price discrimination.” Economic Inquiry. 58(3), pp. 1053-1075, July 2020. Link to paper Abstract
The movement to deregulate major industries over the past 40 years has produced large efficiency gains. However, distributional effects have been more difficult to assess. In the electricity sector, deregulation has vastly increased information available to market participants through the formation of wholesale markets. We test whether upstream suppliers, specifically railroads that transport coal from mines to power plants, use this information to capture economic rents that would otherwise accrue to electricity generators. Using natural gas prices as a proxy for generators’ surplus, we find railroads charge higher markups when rents are larger. This effect is larger for deregulated plants, highlighting an important distributional impact of deregulation. This also means policies that change fuel prices, such as carbon pricing or increased pipeline building, can have substantially different effects on downstream consumers in regulated and deregulated markets.
Arblaster, Margaret and Chrystal Zhang. (2020). “LIberalisation of airport air traffic control: A case study of Spain,” Transport Policy, 91, pp. 38-47. June 2020. Link to paper Abstract Liberalisation of air traffic management (ATM) through tendering of airport air traffic control services has occurred in selective countries. While there have been a few studies which have analysed the theoretical concepts of competition to provide ATM services, there has been limited evaluation of the experience of liberalisation on an individual country basis. Using secondary data from literature and primary data collected from interviews, this research reviews the experience of introducing competition in airport ATC services, using the experience in Spain as a case study. The study investigates barriers that hinder the development of an effectively competitive market structure and pro-competition policies to reduce them. The study finds that introducing competition in airport air traffic control is a complex process. In Spain, efficiency benefits have been achieved without compromising safety and economic regulation of the larger liberalised airports has been avoided. Access to qualified air traffic controllers is a critical barrier to the introduction of competition in airport air traffic control services in part related to the complex licence conditions which are unique to specific airports and functions.
Felix L. Friedt and Wesley W. Wilson. (2020). “Trade, Transport Costs, and Trade Imbalances: An Empirical Examination of International Markets and Backhauls.” Canadian Journal of Economics/Revue canadienne d’économique, 53(2), pp. 592-636. April 2020. Link to paper Abstract The U.S. trade deficit has been growing for over 25 years and has been accompanied by enlarging freight rate differentials. While traditional models of trade have ignored these gaps assuming symmetry across all bilateral trade costs, the specific linkages between trade imbalances and international transportation costs have remained unexplored. Given the current trade policies, the implications arising from the endogenous adjustment of bilateral transport costs to policy-induced changes in the U.S. trade deficit, for example, are of particular importance. To break new ground on this issue, we develop and estimate a model of international trade and transportation that accounts for the effects of persistent trade imbalances. The theoretical results are supported by our empirical analysis and indicate that bilateral transport costs adjust to a country’s trade imbalance. The implication is that a unilateral import policy, for example, will cause spillover effects into the bilaterally integrated export market. To illustrate, we use our empirical results to simulate the anticipated spillover effect from the Chinese ban on waste imports. We find that China’s ban and the projected 1.5% rise in the U.S. trade deficit will not only lead to a 0.77% reduction of transport costs charged on U.S. exports to China, but also a 0.34% increase in transport costs on U.S. imports from China.
Cheung, Tommy King-Yin, Wai-hung Wong, Anming Zhang and Yangming Wu (2020), “Spatial panel model for examining airport relationships within multi-airport regions,” Transportation Research Part A: Policy and Practice 133, pp. 148-163. March 2020. Link to paper Abstract
For better airport planning and air traffic management, local airport authority in a multi-airport region (MAR) often needs to consider the impacts of competition and collaboration with nearby airports on its own airport traffic. This paper proposed a dynamic spatial panel regression model to test the regional effects on airports in a MAR. The proposed model is applied to four closely situated airports in the Pearl River Delta region (PRD), China, to analyze their interactions, identify the determining factors, and evaluate the impact of these factors on airport capacity. PRD is one of the most prosperous areas in Asia, and competition among the four airports has intensified, due, in part, to the rapid growth of Guangzhou airport and Shenzhen airport. Together with the fact that Hong Kong airport reached 98% of its runway capacity in 2016, it is of great interest to understand the interactions among the airports in this region. The findings show that airport degree, flight frequency, airport capacity utilization, income, population, GDP, and fuel price are significant factors affecting airport’s capacity. Furthermore, there is a spatially lagged effect in income and population, and a time-lagged effect in airport capacity, GDP, and fuel price.
Babagolzadeh, Mahla, Anup Shrestha, Babak Abbasi, Yahua Zhang, Alice Woodhead and Anming Zhang (2020), “Sustainable cold supply chain management under demand uncertainty and carbon tax regulation,” Transportation Research, Part D: Transport and Environment 80, 102245. March 2020. Link to paper Abstract
Increasing awareness of sustainability in supply chain management has prompted organizations and individuals to consider environmental impacts when managing supply chains. The issues concerning environmental impacts are significant in cold supply chains due to substantial carbon emissions from storage and distribution of temperature-sensitive product. This paper investigates the impact of carbon emissions arising from storage and transportation in the cold supply chain in the presence of carbon tax regulation, and under uncertain demand. A two-stage stochastic programming model is developed to determine optimal replenishment policies and transportation schedules to minimize both operational and emissions costs. A matheuristic algorithm based on the Iterated Local Search (ILS) algorithm and a mixed integer programming is developed to solve the problem in realistic sizes. The performance and robustness of the matheuristic algorithm are analyzed using test instances in various sizes. A real-world case study in Queensland, Australia is used to demonstrate the application of the model. The results highlight that higher emissions price does not always contribute to the efficiency of the cold supply chain system. Furthermore, the analyses indicate that using heterogeneous fleet including light duty and medium duty vehicles can lead to further cost saving and emissions reduction.
2019:
Weber, B. S. (2019). “Uber and urban crime.” Transportation research part A: policy and practice, 130, pp. 496-5061. Link to paper Abstract
This paper investigates the association of Uber, a substantial transportation innovation, with crime counts in urban areas that have accepted the program. I find the introduction of Uber to be associated with a large and significant reduction of personal crimes by 5% in treated cities (about 43 personal crimes a month, roughly 41 assaults), and discuss several mechanisms through which Uber may be enacting this change. The detailed data set allows us to identify that this crime reduction is equally significant on the weekends, when Uber is expected to deliver the most rides to and from bars. Furthermore, the significant personal crime reduction is almost entirely composed of assaults, which are known to typically be alcohol-related, while no significant reduction occurs in the plausibly irrelevant crimes against property, society, or other personal crimes. These estimates suggests that such ride-sharing programs may have positive effects toward crime reduction that otherwise may not inherently be taken into account by policy makers.
Shao, Jing, Hangjun Yang and Anming Zhang (2019), “Adoption of electric vehicles: Manufacturers’ incentive and government policy,” Journal of Transport Economics and Policy, 53(2), pp. 175-198. April 2019. Link to paper Abstract In the literature, auto manufacturers’ incentives for adopting electric vehicles and their interactions with government policies are understudied, especially through an analytical approach. We develop a game-theoretic model to investigate what vehicle types should be produced from both private firms’ and social perspectives. We then propose an EV-subsidy/environmental-tax policy and derive the optimal policy parameters that maximise social welfare. The monopoly and duopoly markets are examined and compared, and it is shown that the government should charge a higher environmental tax, while offering a lower EV subsidy, in the duopoly market than in the monopoly market.
Balliauw, Matteo, Peter Kort and Anming Zhang (2019), “Capacity investment decisions of two competing ports under uncertainty: A strategic real options approach,” Transportation Research Part B: Methodological, 122, pp. 249-264. April 2019. Link to paper Abstract Ports worldwide operate in an uncertain environment and compete with nearby ports to attract cargo. The extent of competition is influenced by the geographical location and differentiated services offered at ports. In this paper, we study the flexible investment decision of two ports with an option to delay investment in a capacity level that is not ex-ante determined. Ports compete on quantity (Cournot competition) under demand uncertainty and congestion. In a leader-follower timing game, we consider both the entry deterrence and accommodation strategies for the leader port. If one of the ports only has a limited cost advantage, the leader role will be endogenous and will be the result of preemption. Uncertainty is included in the model by a geometric Brownian motion, allowing us to analyse the impact of growth and uncertainty (variability) independently. We find that higher growth, uncertainty and port customers’ aversion to waiting lead to a larger project installed at a later moment. If competition intensifies however, the option value of waiting is reduced, leading to earlier investment, but surprisingly also in less capacity. Finally, if more shares of the ports are publicly owned, the investment will be larger and will take place earlier.
Heywood, J. S., & Weber, B. (2019). “University-provided transit and crime in an urban neighborhood.” The Annals of Regional Science, 62(3), pp. 467-495. March 2019. Link to paper Abstract This paper uniquely examines the influence of a new university bus service on urban crime. It concentrates on the interaction between the new bus service and a long-standing safe ride program. The new bus service is associated with a decline in safe rides, and such substitution raises the well-known concern that a fixed transit route may concentrate victims and criminals increasing crime along the new bus routes. Despite this concern, a series of difference-in-difference estimates demonstrate that the bus service reduces crime in the entire university neighborhood and that this reduction is actually largest along the new bus routes.
Li, Hongchang, Kemei Yu, Kun Wang and Anming Zhang (2019). “Market power and its determinants in the Chinese railway industry.” Transportation Research Part A: Policy and Practice, 120, pp. 261-276. February 2019.Link to paper Abstract This study measures the degree of market power of China’s railway operator and analyzes its determining factors. A newly-developed stochastic frontier method is used to estimate the Lerner indexes of the operator’s 18 regional railway bureaus from 1995 to 2014. Regressions are then conducted on these indexes to identify the determining factors of market power in this industry and explain any regional heterogeneity. We find that China’s railway operator exercises significant market power with an overall positive Lerner index. Furthermore, obvious regional heterogeneity in market power exists among the railway bureaus. Railway bureaus in Eastern China typically have the highest Lerner index scores, owing probably to greater regional rail demand and/or the economies of traffic density in rail operation. We find that China’s dramatic high-speed rail development in recent years appears to have no effect on the overall market power of the rail operator. On the other hand, railway market deregulation, especially a series of price liberalizations in recent years, may provide railway bureaus with more autonomy to exert their market power, widening observed heterogeneity.
Hughes, Jonathan and Daniel Kaffine. (2019). “When Should Carpools in HOV Lanes be Encouraged?” With Daniel Kaffine. Economic Inquiry, 57(1), pp. 667-684, January 2019. Link to paper Abstract Policies to encourage carpooling in high-occupancy vehicle (HOV) lanes have been adopted in the US to lower congestion and reduce air pollution. We analytically model highway congestion and other vehicle-related externalities. Encouraging carpooling decreases total costs when congestion relief in mainline lanes outweighs increased HOV lane congestion. Importantly, entry of new drivers via induced demand can negate the benefits of increased carpooling. Using 10 years of traffic data from Los Angeles we estimate time and route-specific marginal external costs. Because costs vary substantially across routes, hours and days, current policies to promote carpooling will often increase social costs.
