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Graduate Student Supervision
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Dissertations completed in 2010 or later are listed below. Please note that there is a 6-12 month delay to add the latest dissertations.
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This dissertation focuses on two major topics in air and rail transportation. The first one is related to various aspects of interactions between airlines and high-speed rail (HSR). We first analyze the effects of cooperation between a hub-and-spoke airline and an HSR operator when the hub airport may be capacity-constrained (Chapter 2). We find that, as compared to the case of modal competition, such cooperation may increase or decrease social welfare, depending on modal substitutability and hub capacity. Then we study the impact of air-HSR competition on the environment and welfare (Chapter 3). We show that the introduction of HSR, even if it is more environmentally friendly than airlines on a per-seat basis, may have a net negative effect on the environment and social welfare. Lastly we investigate the long-term impacts of HSR competition on airlines (Chapter 4). We find that when HSR enters the trunk routes or increases its competitiveness, an airline will have a greater incentive to cover more regional (foreign) markets and move towards hub-and spoke network if the trunk market is larger. The second topic is related to the strategic coalitions among airlines. First we analyze the partnership formation for two competing local airlines and two global alliances (Chapter 5). We find that the equilibrium outcome depends on whether they play in a simultaneous game or a sequential game. Then we examine the strategic vertical relationship between network and regional airlines (Chapter 6). We develop a model to illustrate how network airlines can use the contractual relationship with regional airlines as an efficient tool to simultaneously drive out inefficient network airlines and also accommodate other cost efficient network airlines in any specific market. The model is tested on U.S. data using simultaneous and sequential choice models. Finally, major results of the thesis and future research directions are discussed (Chapter 7). In particular, we propose to study the general impacts of HSR projects on an economy, including urban development as well as the positive spillovers of HSR technology.
This dissertation focuses on two major topics in transportation. The first one is related to hinterland accessibility of seaports. We analytically examine the interaction between urban road congestion and competition of two seaports on a common hinterland. An increase in road capacity by a chain will improve its port’s profit while reducing the rival port’s profit. The impact of levying road tolls and the optimal road pricing rules are also discussed. Given the above theoretical predictions, we empirically investigate the impacts of hinterland access conditions, especially urban road congestion, on the competition between as well as efficiency of major container ports in the United States. We find that more delays on urban roads may cause shippers to switch to competing rival ports. Adding local roads tends to benefit the port and harm its rival (in terms of throughput) by reducing road congestion. In general, there is a negative association between road congestion around the port and port productivity. However, this relationship tends to be negligible for primary ports of entry which enjoy substantially larger container throughput volume. We further investigate the strategic investment decisions of local governments on inland transportation infrastructure in the context of seaport competition. The two seaports and the common hinterland belong to three independent local governments, each determining the level of investment for its own inland transportation system. We examine the non-cooperative optimal investment decisions made by local governments, as well as the equilibrium investment levels under various coalitions of local governments. The second topic is related to airport congestion pricing. We study airport pricing with aeronautical and non-aeronautical services, incorporating the connection between congestion delay and consumption of non-aeronautical services (an aspect that has been neglected by previous studies), and the effect of passenger types. The resulting pricing rule includes two extra terms missing in the literature. Then, we model terminal congestion and runway congestion separately to accommodate their respective characteristics and identify a number of aspects in the optimal pricing rule which differ from those in the literature.
Motivated by health reform debates and policy changes in Canada and other OECD countries, we study how the private and public health care impact on the public health waiting time and more generally the welfare of patients. This thesisencompasses theoretical and empirical research. In Chapter 2, we develop a theoretical model and then empirically test the association between allowing private care financing and public waiting time using joint replacement surgery data of nine Canadian provinces. Two policies that induce private care financing are tested. The empirical results suggest that both policies are associated with shorter public waiting times. This work contributes to the existingliterature by providing an empirical analysis of the relationship between private care financing and public health waiting time under a unique institutional setting. In Chapter 3, we investigate the effect of physician dual practice on public waitingtime and patient welfare. Motivated by Manitoba’s cataract surgery evidence, our study shows that the public waiting time difference existing between dual-practice physicians and public-only physicians can be explained by service quality differentiation.Patients with lower time costs would have a longer waiting time if physician dual practice were allowed. But some of these patients could be better off by receiving a service of higher quality induced by allowing physician dual practice. This work contributes to the limited literature of physician dual practice. In Chapter 4, we study the use of tax or subsidy on private care to improve incomeredistribution given that the public health system is financed by a head tax. When the utilization of the public health system is low, the health planner shouldsubsidize private care to induce patients with higher time costs to the private sector. The production cost of public care would then be reduced and so would be the head tax that everyone pays for. We show that the optimal tax/subsidy decision improvesincome redistribution when the utilization of public health system is either high or low. This work contributes to the literature of public provision of private goods on income redistribution.
This dissertation studies three topics in transport economics and operations management. The first topic is on the economic regulation of congested airports. The second one is revenue sharing between airlines and airports. In the third topic, we investigate the impact of strategic customer behavior on the channel profits.Chapter 2 studies the effects of concession revenue sharing between an airport and its airlines. It is found that the degree of revenue sharing will be affected by how airlines' services are related to each other (complements, independent, or substitutes). It is further found that airport competition results in a higher degree of revenue sharing than in the case of single airports. The airport-airline chains may nevertheless derive lower profits through the revenue-sharing rivalry, and the situation is similar to a Prisoners' Dilemma. Chapter 3 considers price-cap regulation of an airport where the airport facility (e.g., its runway) is congested and air carriers have market power. In the case of airports, there are two versions of price-cap regulation: the single-till approach and the dual-till approach. We show that when airport congestion is not a major problem, single-till price-cap regulation dominates dual-till price-cap regulation with respect to social welfare. Furthermore, we identify situations where dual-till regulation performs better than single-till regulation when there is significant airport congestion. Chapter 4 investigates the impact of customer and firm discounting as well as downstream retailer competition on the benefit of decentralization when customers are strategic. We consider a dynamic two-period model consisting of one manufacturer who sells a product through multiple retailers under linear wholesale price contracts. No firm can credibly commit to future prices or quantities. With strategic customers, we find that a decentralized channel may have higher profit than that of a centralized channel. We show that in addition to the double marginalization effect, both customer and firm discounting and retailer competition are also driving factors of the higher decentralized channel profit.
The rapid growth in air travel demand in the last few decades has led to two majorpublic policy issues in the aviation industry. First, it has placed enormous pressure on theexisting airport infrastructure. As a result, airlines, passengers and shippers are sufferingfrom serious congestion delays at the facilities, implying a significant economic loss tothe society. Second, given the increasing air travel demand, aviation greenhouse gas(GHG) emissions - a major contributor to man-made climate change - are growing at arapid pace. Different public policies are proposed by policy makers and scholars in anumber of different disciplines for the two issues. This thesis aims to investigate andevaluate some of the policies from different perspectives.To deal with the airport congestion problem, the congestion pricing is consideredto be one of the most feasible and simplest solutions, and economists also argue that itwould be welfare-improving. However, the congestion pricing has not really beenimplemented at airports in practice. Chapter 2 considers the case of variable passengertime costs in the airport congestion pricing analysis, and examines its welfare-redistributiveissues. This may help us to explain the unpopularity of the congestionpricing in practice. The Chapter also explores a case where the self-internalization - animportant hypothesis suggested in the literature - may be incomplete. Chapter 3investigates the effects of congestion pricing at a gateway on its hinterland's road tolls,road congestion and social welfare. The problem will become more practically relevant,as it is expected that gateway congestion pricing will be getting more popular in the nearfuture.Another possible solution to deal with the problem of capacity shortage at airportswould be to utilize the existing facilities more efficiently. Chapter 4 measures the airportefficiency in China, and empirically investigates the factors, including competition andpolicy changes, affecting it. Chapter 5 considers another major public policy issue in theaviation industry - GHG emissions. The Chapter provides an analytical framework forexamining the issue, and investigates the effects of unilateral GHG control measures onairline competition, market output, consumer benefits and world emissions.
Master's Student Supervision
Theses completed in 2010 or later are listed below. Please note that there is a 6-12 month delay to add the latest theses.
This study investigates the factors affecting air passengers’ choice of transfer airport in the market between Southeast Asia (SE Asia) and North America (NA). It estimates demand parameters and sheds lights on the business strategies for an airport operator including identifying effective routes to better compete for transfer passengers and allocate resources. More specifically, a discrete choice model is applied to estimate air travelers’ utility from choosing transfer airports in this market. Our data consists of 78 routes which represent the SE Asia - NA market. We estimate demand parameters by standard instrument-variables techniques to control for the endogeneity of airfare, while treating airport characteristics including minimum connection time (MCT), service, size, and detour degree as exogenous. Main empirical findings are: (1) Transfer passengers’ airport choice is determined by an airport’s characteristics including MCT and service quality, apart from those traditional factors such as airfares and travel time. (2) Based on estimated utility function parameters, we provide a quantitative evaluation of the transfer passengers’ willingness-to-pay for several transfer airport’s characteristics. (3) With our estimation results, a case study is conducted for SeoulIncheon International Airport. We identify the candidate route that has the greatest potential to increase the transfer passengers through the airport. This research contributes to a better understanding of air travelers’ choice of transfer airport in the SE Asia – NA market by utilizing aggregated market-level data. We identify the crucial factors that determine transfer passengers’ airport choice and estimate passengers’ willingnessto-pay for airport services and characteristics. The findings of this research provide valuable insights for an airport operator to allocate resources effectively so as to attract airlines and increase transfer passengers.
This study proposed a model to calculate connectivity of multiple transport modes involving quantity and multiple dimensions of quality. Ranking results have been produced for the air-rail connectivity of 2016 and the air connectivity of 2005-2016, with a focus on Chinese cities. The connectivity model incorporates multiple quality-adjustment (discount) factors, including capacity and velocity penalties to correct/adjust for the quality of a connection. The three major economic zones in China, namely, Beijing-Tianjin-Hebei, Yangtze-River Delta, and Pearl-River Delta, are found to have leading connectivity. We also identify the underlying drivers of the variation in airport connectivity over the period of 2005-2016. It is observed that Chinese airports experienced great increase in air connectivity over the study period. Beijing Capital, Shanghai Pudong, and Guangzhou Baiyun are far ahead of other airports in terms of overall connectivity, which is especially so in terms of international connectivity. However, the growth of some tourism cities and small cities has been stagnant and they suffered losses of connectivity at times. Airport competition measured by HHI, average fare, investment in local city’s fixed assets and airport facilities, macroeconomic conditions, and population are found to be closely associated with an airport’s connectivity. We also find the presence of low-cost carriers (LCCs) are conducive for air connectivity while HSR has the effect of decreasing airport connectivity.
Among the few papers that have studied intermodal competition and cooperation between high-speed rail (HSR) and airlines from an analytical point of view, it is assumed that the two modes are horizontally differentiated. However, empirical evidence seems to suggest that the two modes are vertically differentiated. The aim of this thesis is to study the effects of vertical differentiation between HSR and airlines on fares, traffic volumes and social welfare. The analysis is done for both competition and cooperation scenarios, and is conducted in an asymmetric network with hub airport runways being potentially capacity constrained. We find that an improvement in rail speed or air-rail connecting time will lead to a decrease of air fare on the routes where HSR and airlines compete. Furthermore, HSR-airlines competition in the connecting markets may result in airlines charging higher-than-monopoly price in the markets where HSR is not present. Although HSR-airlines cooperation can eliminate this kind of negative impacts, cooperation harms social welfare in the markets where HSR and airlines are both present. Intermodal cooperation benefits some markets while disadvantaging others. In terms of overall social welfare in the network, we suggest that intermodal cooperation should be encouraged if (1) the markets, where air transport is the only mode, are much larger than the other markets; or (2) the connecting markets are much larger than the other markets and airlines cannot serve all markets in the network due to insufficient hub airport runway capacity. Otherwise, intermodal competition should be encouraged.
This paper examines the interaction among airport aeronautical charge, traffic volume, and car rental service charge by employing a cross-section dataset covering 337 airports in the United States. Other determinants of the aeronautical charge are also examined. Using the method of three stage least squares, the main empirical findings are: (1) Car rental price has no significant impact on passenger volume, indicating that rental cost, which is an important cost category of airport concessional goods, does not affect passenger volume of airport. (2) Car rental price has no significant effect on aeronautical charge. (3) Only rental price at airports with a very low transfer rate responds positively to passenger volume. Overall, rental price does not respond to passenger volume or aeronautical charge. (4) Aeronautical charge has a significant negative effect on passenger volume, but it has no significant effect on car rental price.
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