Transport
Transportation papers (without abstracts)
“It is Time to Auction Slots at Congested Airports,” (with Martin Bichler, Peter Gritzmann, and Axel Ockenfels) Vox-CEPR Policy Portal, 10 January 2021.
“Bringing the Efficiency of Electricity Market Mechanisms to Multimodal Mobility across Congested Transportation Systems,” (with Arash Beheshtian, R. Richard Geddes, Omid M. Rouhani, Kara M. Kockelman, Axel Ockenfels, Wooseok Do) Transportation Research Part A: Policy and Practice, 131, 58-69, 2020.
“Using Technology to Eliminate Traffic Congestion,” (with R. Richard Geddes and Axel Ockenfels) Journal of Institutional and Theoretical Economics, 175:1, 126-139, 2019.
“Set Road Charges in Real Time to Ease Traffic,” (with R. Richard Geddes and Axel Ockenfels) Nature, 23-25, 2 August 2018.
“Markets for Road Use: Eliminating Congestion through Scheduling, Routing, and Real-time Road Pricing,” (with R. Richard Geddes and Axel Ockenfels) Working Paper, University of Cologne, April 2019. [Presentation, German press, Wall Street Journal, New York Times]
“Market-Based Alternatives for Managing Congestion at New York’s LaGuardia Airport,” (with Michael O. Ball, Lawrence M. Ausubel, Frank Berardino, George Donohue, Mark Hansen, and Karla Hoffman), in Optimal Use of Scarce Airport Capacity, Proceedings of AirNeth Annual Conference, The Hague, April 2007.
Transportation papers (with abstracts)
“It is Time to Auction Slots at Congested Airports,” (with Martin Bichler, Peter Gritzmann, and Axel Ockenfels) Vox-CEPR Policy Portal, 10 January 2021.
Airport time slots are currently awarded by historic use, with only small number reserved for new entrants. This hampers competition, promotes inefficient slot utilisation, and contributes to congestion. This column revisits he idea of carefully auctioning time slots at congested airports in order to foster competition by more flexibly allocating slots, as opposed to the current use-it-or-lose-it approach which favours the status quo.
“Bringing the Efficiency of Electricity Market Mechanisms to Multimodal Mobility across Congested Transportation Systems,” (with Arash Beheshtian, R. Richard Geddes, Omid M. Rouhani, Kara M. Kockelman, Axel Ockenfels, Wooseok Do) Transportation Research Part A: Policy and Practice, 131, 58-69, 2020.
A central challenge facing Mobility as a Service (MaaS) is mispricing of its a core input: the use of scarce road space. A transparent real-time market for road use is essential for MaaS to reach its full potential. We focus on how network-wide, real-time markets for road use support MaaS, and how such markets can be developed.
In our proposed network-management scheme, roadway tolls (for entire trips – from origin to destination) are determined in a two-stage market hosted by an independent system operator or “ISO”. Service providers purchase the product (the right to use a series of road segments at a reasonably specific time of day) in the day-ahead market. In real-time, the market becomes physical and operates under the principle of open access: road capacity cannot be withheld in real time and its use is determined by users’ decisions, guided by prices and suggested routings. Real-time road-use prices are computed using clearing prices that balance real-time supply and demand. Those with pre-paid slots can be paid to delay their travel, to create space for high bidders during periods of suddenly low capacity or unexpectedly high demand. Such policies and programs can avoid excessive congestion, provide reliable travel times, and keep traffic moving, especially as automation makes car and truck travel easier.
Such policies are critical in helping cities and regions avoid gridlock. They ensure that travelers internalize congestion externalities, while enabling MaaS and other transport providers to deliver higher-quality mobility service for all travelers. Thoughtful marriage of week-ahead, day-ahead and real-time road pricing for travelers on congested networks can deliver efficient transportation systems that save time and energy, while providing signals for optimal infrastructure investment.
“Using Technology to Eliminate Traffic Congestion,” (with R. Richard Geddes and Axel Ockenfels) Journal of Institutional and Theoretical Economics, 175:1, 126-139, 2019.
Traffic congestion is a pervasive worldwide problem. We explain how to harness existing technologies together with new methods in time-and-location markets to eradicate traffic congestion along with its attendant social harms. Our market design for road use builds on congestion pricing and models of efficient pricing in the electricity sector. The market maximizes the value of a transport network through efficient scheduling, routing and pricing of road use. Privacy and equity concerns are addressed. Transparent price information provides essential information for efficient long-term investment in transport.
“Set Road Charges in Real Time to Ease Traffic,” (with R. Richard Geddes and Axel Ockenfels) Nature, 23-25, 2 August 2018.
Traffic congestion costs us time, money and health. Being stuck in traffic is frustrating and stressful. The global economic damage exceeds $1 trillion each year. The solution is dynamic road pricing. Track vehicle use and charge the social cost of this use. We describe how this can be done in a way that respects privacy and equity concerns.
“Markets for Road Use: Eliminating Congestion through Scheduling, Routing, and Real-time Road Pricing,” (with R. Richard Geddes and Axel Ockenfels) Working Paper, University of Cologne, April 2019. [Nature, Presentation, German press, Wall Street Journal, New York Times]
Traffic congestion is a global problem with annual costs approaching $1 trillion. The cost of traffic congestion across the combined British, French, German and American economies was estimated at $200 billion, or about 0.8 percent of GDP, in 2013. In Los Angeles alone, traffic jams cost $23 billion each year. The health and environmental costs are severe in urban centers worldwide.
With the right policies those high social costs can be avoided. Advances in mobile communications and computer technology now make it possible to efficiently schedule, route, and price the use of roads. Efficient real-time pricing of road use can eliminate traffic congestion, enhance safety, improve the environment, and increase vehicle throughput. It also raises reliable, much-needed revenue to modernize decaying infrastructure while improving long-term investment in transport. We describe the design of a market for road use that is based on efficient scheduling, routing, and pricing. Under our design, road use is priced dynamically by marginal demand during constrained times and locations. In unconstrained times and locations, a nominal fee is paid for road use to recover costs, as in other utilities. Transport is scheduled based on forward prices and then routed in real time based on real-time road-use prices.
Efficient pricing of network capacity is not new. Indeed, wholesale electricity markets have been dynamically priced for over a decade. Communications markets are adopting dynamic pricing today. Efficient pricing of road use, however, has only recently become feasible. Advances in mobile communications make it possible to identify and communicate the location of a vehicle to within one cubic meter—allowing precise measurement of road use. User preferences can be communicated both in advance to determine scheduled transport and in real time to optimize routes based on the latest information. Computer advances also facilitate efficient scheduling and pricing of road use. Consumer apps help road users translate detailed price information into preferred transport plans. Computers also allow an independent system operator to better model demand and adjust prices to eliminate congestion and maximize the total value of road infrastructure. An independent market monitor, distinct from the operator, observes the market, identifies problems, and suggests solutions. A board governs the market subject to regulatory oversight.
The market objective is to maximize the value of road infrastructure via scheduling, routing, and real-time pricing of its use. The optimization of road use eliminates congestion, making our roads safer, faster, cleaner and more enjoyable to use. The road-use market maximizes the value of our existing transport infrastructure while providing essential funding for the roads network as well as valuable price information to evaluate road enhancements. The market is complementary with and indeed promotes rapid innovation in the transport sector.
“Market-Based Alternatives for Managing Congestion at New York’s LaGuardia Airport,” (with Michael O. Ball, Lawrence M. Ausubel, Frank Berardino, George Donohue, Mark Hansen, and Karla Hoffman), in Optimal Use of Scarce Airport Capacity, Proceedings of AirNeth Annual Conference, The Hague, April 2007.
We summarize the results of a project that was motivated by the expiration of the “High Density Rule,” which defined the slot controls employed at New York’s LaGuardia Airport for more than 30 years. The scope of the project included the analysis of several administrative measures, congestion pricing options and slot auctions. The research output includes a congestion pricing procedure and also the specification of a slot auction mechanism. The research results are based in part on two strategic simulations. These were multi-day events that included the participation of airport operators, most notably the Port Authority of New York and New Jersey, FAA and DOT executives, airline representatives and other members of the air transportation community. The first simulation placed participants in a stressful, high congestion future scenario and then allowed participants to react and problem solve under various administrative measures and congestion pricing options. The second simulation was a mock slot auction in which participants bid on LGA arrival and departure slots for fictitious airlines.