Cost functions for multiple transportation modes in the presence of congestion

This paper introduces an alternative way of specifying the social cost function for transportation services. This paper formulates the transportation cost function as a social cost minimization problem in the presence of congestion phenomena. This social cost function has an advantage in terms of assessing the cost structure of various transportation modes in a unified manner. In addition, the social cost function has a structure that can yield precise information about the structures of other cost functions such as a marginal social cost function and a marginal supplier cost function. This paper illustrates those advantages with the analysis to derive the specific expressions of the various cost functions for highway uses, and for public transit services. Especially, this analysis pinpoints on identifying the difference in the structures of cost functions for the two modes. Received: February 2001/Accepted: December 2001     

Economic impacts of transportation network changes: Implementation of a combined transportation network and input-output model

This article estimates and evaluates the economic impacts from a catastrophic earthquake within regional and national contexts, emphasising the inter-industry relationship in conjunction with regional commodity flows and the assessment of seismic damages on a transportation network. The analytical methods employed are twofold: a multi-regional input-output model and a regional commodity flow model. Using the above analytical framework, the economic impacts from a catastrophic earthquake are estimated and evaluated based on hypothetical scenarios of the event, by analysing the magnitude and extent of direct and indirect impacts. Furthermore, as possible extensions, the models developed here can be used as tools for strategic management of the recovery and reconstruction efforts after the event. Received: 24 September 2000 / Accepted: 23 May 2001     

Logistics cost, consumer demand, and retail establishment density

This article develops models to formulate the optimal density of retail establishments by considering interactions between logistics cost and consumer demand. Commodities are assumed to be distributed from a depot directly or through single intermediate terminal to many retail establishments. Average logistic cost per item, consumer demand, and the interrelationship between them are analyzed. The optimal density of retail establishments and local terminals are determined by minimizing average logistic cost, or maximizing total supply subject to the demand-supply equality. The envelope curves for the optimal configuration strategies corresponding to different values of total market area and terminal cost are derived. Received: 3 October 1996 / Accepted: 29 January 1999     

Road pricing with limited information and heterogeneous users: A successful case

Since strictly optimal (first-best) road pricing policies require information that we will probably never have, it is important to investigate what can be done under more restrictive assumptions as to what information is available. One such case is examined in this paper, where the main restrictive assumptions are that all users have the same choice set and that all alternatives have the same monetary cost. Individuals have utility functions with constant marginal utilities of time and money, but these marginal utilities vary across individuals, and are assumed to be unobservable.  We show that for this model, any toll reform that reduces aggregate travel time and redistributes the toll revenues equally to all users makes everyone better off. This holds regardless of the distribution of marginal utilities of time and money, and for any road network. Received: November 1999/Accepted: July 2001     

Congestion deterioration and transportation project evaluation

Transportation projects may lead to deterioration in the average travel time of the urban area because projects reduce travel cost and thus stimulate additional demand caused by migration. Transportation benefits are conventionally measured by the total surplus based on the general equilibrium demand curve for trips. Applying the conventional measurement method to the above paradox of increased congestion results in a negative measured benefit. The present paper explores the economic conditions that lead to this paradox. The study concludes that the necessary condition is the existence of both migration and positive external agglomeration economies. Accordingly, the conventional benefit measurement method is not applicable in this case. Last, the paper shows the benefit measurement formula corresponding to this case and some numerical simulations.     

Capital cities: When do they stop growing?

This article is an attempt to explain a capital city's size. We assume away explanations such as exploitation of the capital city's hinterland. Instead, we emphasise the role of the localisation of government activity (i.e., administration or legislation) in the capital city for both the capital city economy and the hinterland economy. We assume in the model that larger regions benefit from agglomeration economies. We discuss the interaction of those agglomeration economies with an agglomeration diseconomy specific to the capital city. Under certain conditions, a stable population distribution between the capital city and its hinterland emerges where neither region captures the entire population. We also analyse the comparative statics properties of this stable equilibrium. Received: 6 June 2000 / Accepted: 27 November 2000     

Modelling residential location choice in an area with spatial barriers

A model is presented for residential location choice in rural areas with spatial barriers. We address the problem through comparative static analysis focusing on how residential location choices are affected by a new road link across the spatial barrier. We proceed through a probability theoretical approach: choose a family of utility functions representing every possible location, and equip this family with a probability measure. Then choose a representative within an equivalence class of utility functions, and represent the probability distribution by a parametrized family of distributions. Our analysis demonstrates that investments in new road links do not necessarily represent an adequate instrument for achieving ambitions in regional policy. We identify reasonable situations where a new road link could just as easily generate net migration from the area in which the investments are directed. In general, our analysis demonstrates how agglomeration and centralisation tendencies can be considerably affected by transportation infrastructure innovations. Received: June 1999/Accepted: June 2001 This paper benefited from comments by Bj?rn Sandvik and Lars-G?ran Mattsson.     

Areas, nodes and networks: Some analytical considerations

This situation has been identified in the literature as the ‘self potential’ problem. In this article, integration over continuous space within the origin-destination zones is applied to not only compute the intrazonal flows more accurately, but also to evaluate the interzonal flows along shortest path routes meeting the interzonal links at efficient intermediate points. In particular, this general approach permits more accurate corrections to the conventional model, allowing, for instance, the usual approximations in determining average trip length to contiguous zones to be overcome. The eventual aim is to develop practical ‘rules of thumb’ for correcting the conventional analysis. This article also examines facility choice via alternative round trip routes, attempting to discern the influence of ‘intervening opportunities’ on the potential for multi-stop trips without having to fully identify the actual trip chain. Such intervening opportunities can only be properly considered along the alternative paths of the actual network. Received: 7 October 1998 / Accepted: 23 December 1998     

An application of the Beckmann-Ingene argument to a monopsonist's spatial pricing problem

The purpose of this note is to show that an analogue of the Beckmann-Ingene proposition on price policies of a spatial monopolist applies to a properly formulated profit maximization problem for a spatial monopsonist. The proof of this fact uses the same linear transformation employed in the Beckmann-Ingene argument. Received: 15 October 1998 / Accepted: 9 January 1999     

The propagation of uncertainty through travel demand models: An exploratory analysis

The future operations of transportation systems involve a lot of uncertainty – in both inputs and model parameters. This work investigates the stability of contemporary transport demand model outputs by quantifying the variability in model inputs, such as zonal socioeconomic data and trip generation rates, and simulating the propagation of their variation through a series of common demand models over a 25-zone network. The results suggest that uncertainty is likely to compound itself – rather than attenuate – over a series of models. Mispredictions at early stages (e.g., trip generation) in multi-stage models appear to amplify across later stages. While this effect may be counteracted by equilibrium assignment of traffic flows across a network, predicted traffic flows are highly and positively correlated. Received: March 2001/Accepted: August 2001     

Closing the case on closure in Cole's model

In his response to Closure in Cole's Reformulated Leontief Model (Jackson et al. 1997) Cole presents the mechanics of his solution. His spreadsheet demonstration of the model, however, fails to fully address the conceptual issues and model specification concerns raised in our critique. His demonstration does enable us to provide a sorely needed formalization that pinpoints the inconsistencies in his model. While we join with Cole in urging modellers to strive for clarity, transparency, and utility, we caution against allowing these goals to cause us to lose sight of internal consistency requirements. Received: 9 September 1998 / Accepted: 1 March 1999     

Firm and household mobility in the presence of variations in regional characteristics

This paper examines the behavior of households and firms in the presence of variations in regional characteristics that affect their location decisions. It then determines relevant equilibrium conditions. Based on the implications of these equilibrium conditions, firm and household locations can be explained either by the dominance of firms or by the dominance of households. The results of this theory are applied to the case of 17 Arab countries. Received: November 1998/Accepted: June 2000     

Sources of variation in regional economies

This paper employs a vector autoregressive (VAR) methodology to examine the role of oil price shocks, defense shocks, national, and local shocks in explaining fluctuations in non-farm employment in a sample of ten states/MSAs in the US in the period 1969–2000. These include a sample of energy rich states and a sample of presumed beneficiaries of defense spending. Existing literature provides mixed evidence on the effects of defense shocks and oil shocks or does not focus on individual states. Results of this paper indicate that oil shocks and defense shocks have more pronounced effects at the local level than they do at the national level. An increase in the price of oil has a fairly large and for the most part statistically significant positive impact on the energy rich states and has a negative and statistically significant impact in the case of the Detroit-Flint MSA. When defense shocks occur they have a sizable impact on local economies that are beneficiaries of defense spending, even though their importance over the whole sample is not always significant. A key policy implication that emerges is that macroeconomic policy at the aggregate level may not be sufficient to uniformly stabilize regional economies that face oil, defense, and local shocks. Furthermore, to the extent that some of these states are linked more to their own local economies rather than to the US economy, they would have to rely more on local stabilization policies when faced with adverse local shocks. Received: November 2001/Accepted: August 2002     

An application of a switching regimes regression to the study of urban structure

The purpose of this article is to propose and highlight a statistical estimation procedure for joint identification of irregularities in population distribution in urban areas having a directional dimension, and the estimation of the parameters of the model's separate regimes. The method we propose here is an application of the switching regimes regression technique developed by Quandt (1958, 1960) for identifying the most likely allocation of n observations into two separate regimes, each associated with a different mechanism that generates its own set of observations. A subsequent purpose is to apply empirically the switching regimes method to the city of Tel-Aviv – Yafo, and discern possible regimes where population densities are generated by different processes. Received: 28 August 2000 / Accepted: 16 March 2001     

Entrepreneurship and spatial externalities: Theory and measurement

The paper presents an empirical analysis on the role played by urbanisation and localisation economies on factor productivity of firms. A vast literature exists on this issue, conceptually presenting reasons supporting either industry size or city size as sources of external advantages. In general, the empirical analyses are based on the estimates of aggregate city or industry production functions; the limited hypotheses characterising these studies have suggested to test another methodology, based on the estimate of a production function at the firm level, and calculate how factor productivity changes according to different degrees of urbanisation and localisation economies. The methodology is applied to firms chosen in the high-tech sector, which demonstrates a high spatial concentration in particular areas of the Metropolitan Area of Milan. The result is that factor productivity is influenced by both urbanisation and localisation economies, but the latter show an increasing positive effect on factor productivity. Moreover, the size of firms plays an important role in defining the impact of urbanisation and localisation economies on firms' outcome.     

Financing road infrastructure by savings in congestion costs: A CGE analysis

Division of labor, outsourcing in manufacturing and just-in-time production require the provision of a good and sufficient road infrastructure system. The society is used to mobility, preference for it even increases, and the full benefit of competition can only be realized if special distances can be overcome at low cost of transportation. Since the 1970's, however, the negative aspects of an intensive extension of road infrastructure has dominated the political decision process in Germany.  The objective of this paper is to model the aspects of bottlenecks in road infrastructure, of congestion costs and of the effect of investment in infrastructure in a computable general equilibrium framework. A long-run “business as usual” simulation will show how congestion and its cost will develop over time. The increasing costs of congestion indicate a necessity to act. We will therefore raise the fuel tax to partly finance infrastructure investment. We will then compare the cost of the addition in infrastructure with the savings in congestion costs in order to see whether this policy measure is self-financing. Received: April 2000/Accepted: August 2001     

National structural change and metropolitan specialization in the United States

The national economy is split into four broad sectors. The observed variation in long-term growth among sectors leads to a shift in the composition of aggregate demand. I test Henderson's propositions, namely that secular shifts in the composition of national demand lead to changes in the numbers and sizes of different types of urban places. The numbers and sizes of places specialized in the information sector has increased while the numbers and sizes of places specialized in manufacturing has decreased or has not changed. Metropolitan population growth and per capita earnings growth are enhanced by specialization in the information sector. Received: 29 January 1998 / Accepted: 9 March 1999     

Has the increase in world-wide openness to trade worsened global income inequality?

This article contributes to our understanding of the relationship between globalization and world income inequality by analyzing the trend in global inequality for the period 1960–1989. Using Penn World Tables data and time-series econometric techniques, it analyzes how the increase in worldwide openness to trade has been related to global income inequality during this period. When differential population growth rates among the countries are taken into account, the results indicate that (i) global income inequality exhibited a downward trend between 1960 and 1989, and (ii) while there is a positive relationship between inequality and openness, the relationship is not statistically significant. Received: 22 December 2000 / Accepted: 29 May 2001     

Optimal facility placement and discriminatory congestion pricing in neighborhoods with different time costs

In many urban areas, time costs or wages vary between neighborhoods, but there is little wage variation within a given neighborhood. Neighborhoods are often labelled “working class,”“middle class,” or even “wealthy.” For this reason, there are many efficiency and distributional issues related to location because location largely determines access costs. Congestion also affects time costs and access. Many public policies are geared towards improving access for households in low-wage neighborhoods. Public facilities are built; some firms receive nonprofit status. In order to evaluate these policies, normative theory is needed. This paper develops theory on the optimal placement of facilities and their congestion prices in urban areas with wage variation between neighborhoods. The results show that optimal locations and prices depend on the extent of wage inequality. Received: February 2001/Accepted: September 2001     

Urban rent and urban dynamics: The determinants of urban development in Italy

Many empirical analyses have proved the existence of an optimal city size through the measurement of economies or diseconomies of scale, generally applied either to the costs of urban services or to elegant econometric estimates of urban and sectoral production functions. But, unfortunately these studies have never produced a common result, and have often been subject to criticism for their restrictive hypotheses. The aim of the present paper is twofold. First of all, urban dynamics in Italy is described through an indicator of urban costs and advantages, i.e. urban rent. House prices are in fact a good indicator of the attraction of an urban area, as they are synthetic and avoid a time lag between the occurrence of phenomena such as demographic change, and the availability of data to capture these phenomena. This study is based on the idea that the difference in house prices between large and small cities is a measure of their relative attraction (and thus their relative location advantage). The second aim is to highlight the determinants of urban dynamics, and especially to understand whether urban development patterns are similar in cities of different size. For this second issue, the paper enters the debate on the existence of an optimal city size for all cities and draws attention to other possible determinanats of urban development. Received: May 2000/Accepted: January 2002