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on Transport Economics |
| By: | Chia-Wen Chen; Wei-Min Hu; Christopher R. Knittel |
| Abstract: | The Chinese automobile market is the largest in the world with annual sales exceeding 20 million vehicles. The tremendous growth in sales---over 200 percent from 2008 to 2015---and concerns over local air quality have prompted China's policy makers to incentivize the adoption of more fuel efficient vehicles. We examine the response of vehicle purchase behavior to China's largest national subsidy program for fuel efficient vehicles during 2010 and 2011. Using variation from the program's eligibility cutoffs, we find that the program boosted sales for subsidized vehicle models, but that the program also created a substitution effect within highly fuel efficient vehicles and most subsidies went to inframarginal consumers. This substitution effect greatly reduces the cost effectiveness of the program. We calculate that the average cost per ton of carbon dioxide saved is over 82 USD, well above the social cost of carbon used in U.S. regulatory filings. Using the framework in Boomhower and Davis (2014) and accounting for local pollution benefits, we show that ignoring the substitution effect would lead one to conclude that the program is welfare enhancing, whereas in fact the marginal cost of the program exceeds the marginal benefit by almost as much as 300 percent. We also show that the program was not well-targeted; the effect of the subsidy on sales of fuel efficient vehicles was smaller in areas where consumers were more likely to purchase fuel inefficient models or were lower educated. |
| JEL: | L5 L91 Q4 Q5 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23045&r=tre |
| By: | van Lieshout, R.N.; Mulder, J.; Huisman, D. |
| Abstract: | When a vehicle breaks down during operation in a public transportation system, the remaining vehicles can be rescheduled to minimize the impact of the breakdown. In this paper, we discuss the vehicle rescheduling problem with retiming (VRSPRT). The idea of retiming is that scheduling flexibility is increased, such that previously inevitable cancellations can be avoided. To incorporate delays, we expand the underlying recovery network with retiming possibilities. This leads to a problem formulation that can be solved using Lagrangian relaxation. As the network gets too large, we propose an iterative neighborhood exploration heuristic to solve the VRSPRT. This heuristic allows retiming for a subset of trips, and adds promising trips to this subset as the algorithm continues. Computational results indicate that the heuristic performs well. While requiring acceptable additional computation time, the iterative heuristic finds improvement over solutions that do not allow retiming in one third of the tested instances. By delaying only one or two trips with on average 4 minutes, the average number of cancelled trips is reduced with over 30 percent. |
| Keywords: | Vehicle rescheduling, retiming, Lagrangian heuristic |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureir:95143&r=tre |
| By: | Murtaza Haider and Liam Donaldson (Ryerson University) |
| Abstract: | This report reviews alternative sources of revenue to support new infrastructure and other development projects for which municipal funds are not readily available. We review two such instruments: Tax Increment Financing (TIF) and Land Value Capture (LVC). We found more frequent use of TIF than LVC. TIF has largely been used to fund small-scale projects, often not exceeding one or two hundred million dollars in capital costs. We could find only two TIF implementations that aimed to generate over a billion dollars in TIF revenue, and those projects fell short of meeting the revenue targets. The evidence for TIF efficacy is mixed and depends, to some extent, on the type of methods used in the analysis. Some studies found the TIF districts reported higher rates of development and greater real estate price appreciation than comparable non-TIF districts. Other studies reached different conclusions. Three key elements were repeatedly found to contribute to TIF success. (1) Mixed land use developments often met their intended TIF objectives. (2) The timing of TIF implementation mattered; TIFs initiated during recessions met with limited success. (3) Smaller TIFs were more successful in meeting revenue targets than larger ones. We simulate a 30-year TIF implementation along the Sheppard East corridor in Toronto, the route for the Sheppard subway line that started operations in 2002, and offer insights for local and higher tiers of government interested in implementing TIF. Our analysis of the Sheppard East corridor found that the net present value of the simulated TIF revenue covered only a small portion of the capital costs of extending the subway line. |
| Keywords: | tax increment financing, land value capture, value capture, infrastructure |
| JEL: | H27 H76 R42 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:mfg:wpaper:25&r=tre |
| By: | Li, Zhigang (Asian Development Bank Institute) |
| Abstract: | The recent experience of infrastructure investment in PRC suggests an intertwined relationship between investment, urbanization, and economic growth. In one mechanism, urbanization generates demand for infrastructure investment, which then drives economic growth via various channels including reducing transaction costs and raising productivity. Another mechanism emphasized in this paper is that infrastructure investment can promote urbanization through facilitating economic agglomeration toward hub cities. This agglomeration process also raises productivity in the economy. The lessons from the PRC have implications for infrastructure financing. On the one hand, recent reforms have allowed the market to play an increasingly important role in funding infrastructure investment, helping improve the efficiency of infrastructure investment and the productivity of the economy. On the other hand, evidence in the PRC suggests a cross-province spillover effect of road infrastructure, supporting the central government’s role in infrastructure financing. Although the current infrastructure investment system is still distorted by local governments’ incentives and decisions, there is no evidence of over-investment in infrastructure at the aggregate level. Nevertheless, there is strong evidence that the marginal return to infrastructure investment in the PRC has been rapidly declining. Hence, it is urgent for policy makers to reform the existing system to base their investment decisions on the economic returns to infrastructure. The interregional flow of goods and production factors (labor and capital) is a fundamental force that drives urbanization, but the market may not be efficient in financing and infrastructure construction. This paper analyzes infrastructure-related institutions and the interrelation between infrastructure and urbanization. It addresses the following issues: What is the relationship between infrastructure, growth, and urbanization? How efficient have investment and financing been for infrastructure construction? How can we evaluate the performance of infrastructure development? How and to what extent should the government be involved in infrastructure construction? |
| Keywords: | infrastructure; urbanization; infrastructure financing; development; construction; investment; economic growth |
| JEL: | H54 O18 R42 |
| Date: | 2017–01–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0632&r=tre |
| By: | Abdelkafi, Rami (The Islamic Research and Teaching Institute (IRTI)); Bedoui, Houssem Eddine (The Islamic Research and Teaching Institute (IRTI)) |
| Abstract: | With the adoption of the new development agenda, the global economy is facing great challenges to finance the existing infrastructure gap, especially in developing countries. The private sector should play a more active role to complement the public sector efforts to finance infrastructure investments. Sukuk issuance has recently been considered as one of the potential solutions to mobilize financial resources from the private sector and to incentivize the private capital to invest in public infrastructure development. Nevertheless, the existing evidence shows that to date only a few countries have been able to develop their Sukuk markets. Furthermore, the development of the sovereign Sukuk market has been always contingent on the financial situation of the originator, for example, the government. The main purpose of this paper is to show the reasons behind the underdevelopment of Sukuk in financing infrastructure projects. The paper focuses on the main challenges that developing countries may face while issuing Sukuk to develop infrastructure projects. Although different from conventional instruments, most of the Sukuk structured and issued in the current market may have the same impacts on the economy as conventional bonds. Structuring Sukuk as it is theoretically designed would be a very challenging task for developing countries. The existing evidence shows that developing economies should prepare the ground for Sukuk issuance and for the implementation of infrastructure projects to attract private capital. First, being very complex in nature, these infrastructure projects require important efforts to cover all technical aspects characterizing all phases of the implementation. Second, as a form of Public Private Partnership (PPP), Sukuk issuance would go through the same process that a country needs to introduce this project financing mechanism. Finally, Sukuk issuance requires the establishment of a legal and regulatory framework adapted to Islamic Finance principles. |
| Keywords: | Sukuk; infrastructure financing; SDGs; public debt; PPP |
| Date: | 2016–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:ris:irtipp:2016_003&r=tre |