B. Starr McMullen

Vehicle Mileage Fee on Income and Spatial Equity: Short- and Long-Run Impacts

Because of concern about the declining purchasing power of gas tax revenue due to inflation, public opposition to tax increases, and the improved fuel efficiency of new vehicles, the 2001 Oregon legislature created the Road User Fee Task Force (RUFTF) to make recommendations for a potential replacement for the gasoline tax. This paper estimates the distributional impact of the statewide vehicle miles traveled (VMT) fee policy proposed by the RUFTF on individuals with different incomes and residential locations. The methodology employs both vehicle ownership and type choice models and regression-based vehicle use models. This allows an examination of both short- and long-run responses from the affected households. The measures of the distributional impact of the proposed VMT fee include changes in consumers’ surplus, fee-collection agency revenue totals, and overall welfare changes by income and location groups. The results show that the distributional effects of a

Testing for market power in the U.S. motor carrier industry

0.012/mi flat VMT fee are not significant in either the short or long run and suggest that distributional concerns should not be a hindering factor in the future implementation of the proposed VMT fees.

Relationship Between Vehicle Miles Traveled and Economic Activity

During the 1980s, researchers noted a trend towards increased concentration in the general freight, less-than-truckload (LTL) portion of the U.S. motor carrier industry. The purpose of this study is to employ new empirical industrial organization techniques to determine whether the more concentrated, post-1980, LTL industry exerted monopoly pricing behavior and to compare the nature of pricing behavior before and after regulation reform.The results suggest that the trend toward increased industry concentration does not imply anti-competitive performance. Also, the results indicate the presence of regulation-induced market power several years prior to regulation reform in 1980.

The new co-payment policy under Taiwan’s National Health Insurance: welfare gain or welfare loss?

Vehicle miles traveled (VMT) in the United States has exhibited an upward trend over time similar to that observed for the gross domestic product (GDP) and personal income. Although conventional wisdom suggests that economic growth leads to more driving and thus higher VMT, it is theoretically possible that the causation could be the other way around. If causation is from VMT to GDP, a directive from legislation such as the Federal Surface Transportation Policy and Planning Act of 2009 to reduce national per capita VMT annually could have an adverse impact on the overall economic activity. This study uses times series techniques to test empirically for Granger causality between VMT and various measures of the national economic activity over time. In most circumstances the causal relationship is found to be from economic activity to VMT; this relationship confirms conventional wisdom and suggests that exogenous shocks to VMT will not negatively affect the national GDP. The relationship between national VMT and GDP is found to be dependent on the stage of the business cycle, in particular, when GDP leads VMT in economic upturns or normal times but VMT tends to lead GDP recessions. For the 98 urban areas included in this study, no significant causal relationship was found between VMT and economic activity in either direction.

Is There Still a Southwest Effect

This paper provides a welfare assessment of the new Taiwan National Health Insurance (NHI) co-payment policy, enacted July 15, 2005. This policy creates a pricing mechanism designed to entice patients to first seek outpatient care at local clinics rather than hospitals. Our empirical findings suggest that while the new policy results in a net welfare gain, it is far less than the expected annual growth in NHI medical expenditure. Thus, additional policy changes will be required to deal with Taiwan’s NHI future financial shortfalls.

Evolution of transportation policy and economics

The U.S. airline industry is in a period of consolidation through mergers between leading carriers. A number of recent mergers have been approved by the Antitrust Division of the Department of Justice (DOJ), in part because of the presence of Southwest Airlines in the affected markets. In its approval of the mergers, DOJ makes a key assumption that Southwest is unresponsive in its pricing strategy to the reduced competition when its competitors merge. Numerous studies have validated the so-called Southwest effect, through which potential or actual entry into a market by Southwest Airlines is associated with lower market fares. However, considerably less work has examined Southwests postentry pricing strategies. This study finds that Southwest raised fares more between 2005 and 2010 in markets affected by the Delta–Northwest and US Airways–America West mergers than in other markets. Southwests fares either decreased or rose by less when the company was facing direct or adjacent competition from a low-cost carrier (LCC). DOJs approval of Southwests merger with AirTran, its biggest LCC competitor and strongest deterrent to raising fares in merger-affected markets, raises questions about Southwests ability to continue as a suitable deterrent to postmerger fare hikes, particularly in the absence of other LCCs in those markets.

Importance of Recognizing Locational Differences in Assessing the Impact of a Road User Charge: Oregon Case Study

Abstract This chapter discusses the shift in the focus of transportation policy from questions regarding transportation industries or carriers needed to conduct policy in a regulated environment, to issues regarding the finance and pricing of the transportation system and investment decisions on infrastructure. Policymakers are faced with the classic economic problem of allocating scarce resources in a manner that will maximize social welfare and to do so requires the expertise and advice of economists. A vehicle miles travelled (VMT) tax has been proposed as a first step in providing sustainable highway finance and correcting distortions caused by historic underpricing of roads in the United States. Several empirical studies examining the distributional Impact of a VMT tax are reviewed here as policymakers grapple with practical solutions to the finance problem. Issues regarding transit investment and subsidies as well as economic factors to consider when making multimodal investment decisions for freight are discussed. The role of transportation economists in these policy decisions is particularly critical if policies are to achieve desired objectives.

Current State of Estimation of Multimodal Freight Project Impacts

Oregon Senate Bill 810 created a program that allows drivers to pay a flat-mileage road user charge (RUC) of 1.5 cents per mile rather than the 30 cents per gallon state fuel tax. Major concerns about the adoption of this RUC are that it could increase costs for rural households relative to urban households and that the costs would fall disproportionately on lower-income groups. Further, it has been suggested that significant differences in the impact of the RUC could arise from locational distinctions beyond the urban–rural split alone. Earlier studies analyzed the regional impacts of an RUC only at the statewide level or only with the use of a broad urban–rural distinction. The newly available Oregon Households Activity Survey (OHAS) data provide detailed household location information, which permits impacts to be assessed with regional and geographic definitions relevant to policy makers in Oregon. Results with the use of OHAS data showed that, on average, statewide households would pay 5 cents more daily under the RUC than they did under the fuel tax because the 1.5 cents per mile RUC actually will produce more gross revenue than the fuel tax. However, the price increase in rural regions will be less than the statewide average, whereas more urban regions will pay slightly more than the statewide average. Further, the distributional impact of the flat 1.5 cents RUC on all households in the OHAS data set differed, depending on the region of the state examined.

Distributional impacts of changing from a gasoline tax to a vehicle-mile tax for light vehicles: A case study of Oregon

As available data have increased and as the national transportation funding bills have moved toward objective evaluation, departments of transportation (DOTs) throughout the United States have begun to develop tools to attempt to measure the effects of different projects. Increasingly, DOTs recognize that the freight transportation system is necessarily multimodal. However, no DOTs have clearly stated objective tools with which to evaluate multimodal freight project comparisons. This paper informs that gap by summarizing the existing academic literature on the state of the science for the estimation of freight project impacts and by reviewing methods currently used by selected DOTs nationwide. These methods are analyzed to identify common themes to determine potential avenues for multimodal project evaluation.