Transportation economics

Most of my transportation research focuses on understanding and managing the social impacts of new transportation technology. I also study topics related to congestion in transportation industry.

This paper argues that vehicle autonomy will likely require development of special guideways, fully isolated from pedestrians and human-operated vehicles. Such network is unlikely to be viable in isolation; the paper makes a case for dual-mode vehicles that can operate autonomously on guideways and as a traditional car on public roads. It is further argued that vehicle sharing is an important prerequisite to autonomy; a number of technological, management, and regulatory innovations that promote sharing are discussed. A separate section discusses future autonomous freight transportation; it is argued that autonomy will result in a very large number of very small freight vehicles. The resulting congestion and its management will further contribute to the growth of autonomous guideway network.

This paper provides a theoretical argument for preferential treatment of shared vehicles (SV) over private ones by municipal parking authorities. When all parked vehicles are treated equally, multiple equilibria may exist: (i) a “private” one, where travelers are reluctant to share their vehicle, due to lack of alternatives for their next trip, and (ii) a “shared” equilibrium, where travelers release their vehicles for use by others, due to abundance of other SV for their next trip. The latter equilibrium, if exists, is shown to deliver a higher welfare. Municipal parking discounts for vacant SV are shown to make the private equilibrium unstable, so even a small initial fleet of SV pushes the economy towards the shared equilibrium.

This paper analyzes profit-maximizing pricing in a model of shared vehicle (SV) market, with particular emphasis on spatial inequality of demand. I show that the best policy assigns a score to every location, and rewards (penalizes) customers for relocating the vehicle to a place with higher (lower) score. Such spatially explicit pricing enables providers to expand the vehicle dropoff “home” area into otherwise unprofitable low-density suburban areas and into for-fee parking zones. A greater geographic coverage has positive spillovers on operations within the initial home area. The empirical part of the paper uses novel microdata on SV trips to develop a strategy to estimate demand parameters, extrapolate them into larger counterfactual home area, evaluate optimal location scores, and predict profit gains from the expansion. 

We develop a theory of optimal aircraft size, where the cost of the flight crew is the primary factor driving the use of larger aircraft, while passenger utility is primary factor driving the use of smaller aircraft. After fitting our model to U.S. data, we perform a counterfactual experiment where the minimum crew size requirement is relaxed from two pilots to one, a policy currently being discussed by aviation experts. Implications are derived for the number of aircraft demanded and its size distribution, demand for pilots, passenger traffic, flight frequency, and where new nonstop service may be introduced.

The paper investigates under what conditions it is optimal to exclude some motorists searching for parking from occupying a vacant parking bay. Privileged parking is found to be optimal if motorists are heterogenous and can steer their search towards or away from such parking. The socially optimal allocation of privileges and search strategies are characterized. The second-best pricing policies in the presence of cruising-for-parking externality are described; short-term parkers should always be allowed to take the first vacant bay they find. A model extension studies technologically modified “special needs” parking. Unlike existing policies that make such parking exclusive for special-needs motorists, the optimal policy makes it available for an extra fee to anyone, while increasing the number of special-needs bays so that even the initial users are better off. 

In the future world of self-driving vehicles, intersections will be managed by computers that send individual commands to each passing vehicle. This paper proposes to make traffic priority contingent on the self-reported value of time of vehicle occupants. A model of two merging roads with stochastic traffic is developed. Algorithms for calculation of optimal exit sequences, accounting for time value heterogeneity, are characterized. Welfare costs of a limited planning horizon are assessed. An incentive-compatible scheme of payment for priority is calculated. Under mild conditions, the mechanism is Pareto improving, that is, benefits all parties. The optimality of the traffic volume and composition under the optimal exit regulation is established. 

Parking occupancy sensors are devices that assist search of vacant parking. The interplay between two government policies, installation of sensors and pricing parking, is studied. When parking is congested and the uniform price is optimal, installation of sensors raises the price, increases turnover of parking. If price discrimination is considered, sensored parking should be cheaper than non-sensored. To achieve optimal search of vacant parking, it is sufficient to equip only a fraction of parking with sensors. Underpriced parking may dampen the sensor installation incentive, relative to the incentive to build extra parking. Nevertheless, in absolute terms the sensor installation incentive is substantial even with free parking. 

The effects of autonomous vehicles (AVs) on urban forms are modeled, calibrated, and analyzed. Vehicles are used for commute between peripheral home and central work, and require land for parking. An advantage of AVs is that they can optimize the location of day parking, relieving downtown land for other uses. They also reduce the per-kilometer cost of commute. Increased AV availability increases worker welfare, travel distances, and the city size. Land rents increase in the center but decrease in the periphery. Possible locations of AV daytime parking are analyzed. The effects of AV introduction on traffic and on mass transit coverage are discussed. 

A model of demand for parking, evolving over time, is proposed. The model features both extensive (whether to park) and intensive (for how long to park) margins of parking demand, allows multidimensional heterogeneity of parkers, and evolution of demand throughout the day. I show that the optimal price for parking is proportional to the rate of arrival of new parkers and is inversely related to the square of the occupancy rate, which is different from previously discussed pricing methods. I show that the primary purpose of pricing is to regulate departures, rather than arrivals, of parkers. I also find that asymmetric information about parkers’ characteristics does not prevent the parking authority from achieving the social optimum. A numerical example compares the optimal policy against the alternatives. 

Other research

Multiple units of property, each owned by a seller with a private value, are perfect complements in a private redevelopment project. The paper develops a mechanism for assembly of property which (i) allows compulsory sales, (ii) does not require any transactions unless the property assembly takes place, (iii) is ex-post budget-balanced, (iv) guarantees a minimum compensation to each seller, and (v) seeks to maximize the joint welfare of sellers. The mechanism is shown to converge asymptotically, as the number of sellers grows, to the seller first-best at a high rate. The mechanism requires very little knowledge about the distributions of seller valuations, and is robust to incorrect specification of distributions of both seller or buyer valuations by the market maker. 

The paper explains long-term changes in birth, death rates, and in attitude to personal consumption by evolution of preferences by means of cultural transmission. When communities are culturally isolated, they are focused on population growth, which results in large fertility and welfare transfers to children, limited adult consumption, and lack of old-age support. With increasing cultural contact across communities, successful cultural traits induce their hosts to increase their social visibility by limiting fertility and increasing longevity via higher individual consumption. Empirical analysis confirms that social visibility, as measured by the number of language versions of Wikipedia biographical pages, is associated with fewer children and longer lifespan. The presence of notable individuals precedes reduced aggregate birth rates. 

Demographic transition theory is developed highlighting cultural transmission pattern as a key driver. Individuals maximize cultural fitness, i.e. the rate of own cultural type absorption by future generations. With low population density, one’s culture can be picked up only by own children, and so cultural fitness equals genetic fitness, individuals allocate all energy surplus to reproduction, and the Malthusian regime occurs. With rising population density, cultural transmission between non-relatives accelerates; knowledge production by an individual makes his culture more attractive. Individuals reallocate some of energy surplus from reproduction to knowledge production, causing technological growth. The model fits observed demographic transition patterns. 

This paper seeks answers to two questions. First, if a greater social activity of an individual enhances oblique (i.e. to non-relatives) transmission of her cultural traits at the expense of vertical (i.e. to children) transmission as well as family size, which behavior is optimal from cultural evolution standpoint? I formalize a general model that characterizes evolutionarily stable social activity. The proposed model replicates the theory of Newson et al. (2007) that fertility decline is caused by increasing role of oblique cultural transmission. Second, if social activity is a rational choice rather than a culturally inherited trait, and if cultural transmission acts on preferences rather than behaviors, which preferences survive the process of cultural evolution? I arrive at a very simple yet powerful result: under mild assumptions on model structure, only preferences which emphasize exclusively the concern for social prestige, i.e. extent to which one’s cultural trait has been picked up by others, survive. 

This paper develops a quantitative model of trade, military conflicts, and defense spending. Lowering trade costs between two countries reduces probability of an armed conflict between them, causing both to cut defense spending. This in turn causes a domino effect on defense spending by other countries. As a result, both countries and the rest of the world are better off. We estimate the model using data on trade, conflicts, and military spending. We find that, after reduction of costs of trade between a pair of hostile countries, the welfare effect of worldwide defense spending cuts is comparable in magnitude to the direct welfare gains from trade. 

This paper develops a one sector, two-input model with endogenous human capital formation. The two inputs are two types of skilled labor: “engineering,” which exerts a positive externality on total factor productivity, and “law,” which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the (inefficient) free-market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration “lottery,” and even the individuals who practice law. 

This paper analyzes international high-skilled migration caused by financial frictions in educational market. I develop a model of learning in which acquisition of skill is only possible through personal interaction with a skilled individual; the income of the skilled is sensitive to financial constraints for the unskilled. Cross-country differences in such constraints have a multiplicative effect on the skill premium, causing outmigration of skilled individuals from a less developed country. I study welfare implications of such brain drain for the sending and receiving countries. Although it makes more difficult skill acquisition in the sending country, the unskilled may still be better off: increased cost of skill acquisition is offset by higher income once the skill has been acquired. For the receiving country, I identify a phenomenon of immiserizing immigration: a depletion of the stock of skill in the sending country due to brain drain hinders further production of skill, which may hurt the receiving country. Additionally, I find that increased openness of the sending country to migration and the resultant accelerated brain drain increase the incentives of the country government to reduce financial frictions.