Essays on the effects of road transport costs

Abstract

Transport costs are likely to be key factors that people take into account when considering how, where, and when to travel. Transport costs also represent a non-negligible share of consumer expenditures. As a result of these factors, variations in transport costs may have important effects on a range of outcomes in the economy. This thesis presents four papers on effects of transport costs in Australia, the United States, China, and internationally. The focus is on fuel prices and vehicle purchase subsidies, the latter being the principal incentive mechanism used to promote electric vehicles in China. Understanding how consumers respond to transport costs is useful for achieving goals such as alleviating traffic congestion, improving road safety, and the move to zero-emission road transport. Using high-frequency data from New South Wales, Australia, analysis reveals that higher fuel prices on average reduce hourly traffic flows. A positive gasoline price elasticity of traffic flows is obtained for weekday peak periods, likely to be because reduced road use demand ameliorates traffic congestion so that more vehicles can pass individual count stations per hour during these times. The results are in line with traffic flow theory and suggest that higher gasoline prices help to alleviate hypercongestion. Evidence is also found that average afternoon peak-period speeds are faster when gasoline prices increase. The focus then turns to road safety. Using international data and a state-level panel for the United States it is found that while a higher gasoline price is associated with a reduction in overall road deaths, the effect on the number of motorcyclist deaths is smaller and is positive in the United States. The differential effect for motorcyclist deaths is likely to be because higher gasoline prices encourage switching to motorcycles due to their superior fuel economy. The research is the broadest study to date on the effect of fuel prices on road deaths by user group. The thesis then turns to analysing large-scale datasets from China. Using a real estate area-level dataset for China's 19 largest cities it is found that higher fuel prices on average lead to a reduction in outer-urban relative to inner-urban housing prices. This is in line with theoretical expectations given that road transport costs tend to increase as one moves further from the inner city. An implication is that the rise of electric vehicles, autonomous vehicles, and working from home may tend to ameliorate geographical price differentials within Chinese cities over time. The final paper uses an electric vehicle registration dataset for 324 cities in China to explore the effect of purchase subsidies for domestically-produced electric vehicles. These subsidies have varied by electric driving range, city, and over time. The results indicate that subsidies have encouraged the uptake of domestically-produced electric vehicles although have discouraged the uptake of imported electric vehicles. Using data scraped from a key web discussion forum, evidence is also found that consumer awareness has an important influence on subsidy effectiveness. Simulations suggest that the subsidy cost of abating carbon dioxide emissions via increasing per-vehicle purchase subsidy on EVs is larger than the current carbon price in China. Show more