Patrick McCarthy

Unlike any other book available, this collection uses a detailed analysis of econometric results from current transportation literature to provide an integrated collection of theory and application. Case studies are used to illustrate the economic principles developed, while testable hypotheses and economic results are highlighted throughout the text to provide a well-developed introduction to the foundations of transportation economics.

Short line railroads are critical to Georgia's transportation infrastructure and support the efficient movement of goods into and out of the State. Twenty-nine short line railroads operate in Georgia, six of which operate either partially or totally over 596 miles of rail track that the Georgia Department of Transportation (GDOT) owns. Based on the Bureau of Economic Analysis Regional Input-Output Modelling System (RIMS II) backward-linkage model, this study estimates the economic impacts associated with short line railroad revenues and with GDOT infrastructure spending on these six short line systems under different sets of assumptions. Among the economic impacts, and depending on the assumptions, the study finds that cumulatively, the six systems increase annual output in the range of $2.8 - $14.5 million, increase annual earnings in the range of $0.7 - $4.1 million, generate annual value-added in the range of $1.4 - $7.5 million, and annually add 10–93 jobs on average.

Private vehicle ownership has rapidly grown with China’s economic development and increasing incomes. This paper analyzes China’s provincial demands for private vehicles during the post-opening period 2000 – 2012. Based on estimates from pooled, fixed effects and Hausman-Taylor models, private vehicle ownership during this period grew at an average annual rate of over 20%, all else constant. The study focuses on the roles of economic, spatial, investment and regulatory factors in shaping private vehicle demands. The study finds that increases in GDP per capita and vehicle use cost reinforce and constrain, respectively, the strong trend toward increased ownership. And absent changes in population density, higher percentages of the population in urban areas increase the demand for private vehicles. But increasing population density provides stronger incentives for reducing vehicle demands. Municipal restrictions aimed at reducing the congestion and environmental effects of vehicle ownership and use are effective in reducing provincial demands. A separate analysis of provinces that are at least 60% urbanized identifies important differences. Vehicle demands are income elastic and infrastructure investments have stronger effects in the most urbanized provinces than in less urbanized provinces.

From a panel of fifty airports over a 13-year period, this research estimates a translog model of airport short-run operating costs. Output is departures and the effective number of 10,000 by 150 feet runways is a quasi-fixed factor of production. The analysis finds that airports operate under increasing returns to runway utilisation, input demand for general airport operations is price elastic, and inputs are Morishima substitutes in production. A residuals analysis suggests that air cargo, aeronautical and non-aeronautical services, and serving international travellers are important airport cost discriminators.

This paper examines North American pulp and paper company bankruptcies that occurred between 1990 and 2009. We demonstrate that shareholders suffer substantial losses (37%) during the month a bankruptcy occurs. Encouragingly, we show that financial ratios are useful in predicting firm failure and that failed firms are less profitable, more liquidity constrained and higher in debt leverage. Using a binary logit model in the spirit of Ohlson, we predict financial distress for pulp and paper firms 1 to 2 years ahead of the bankruptcy. We also adapt and re-estimate the empirical model on a sample of pulp and paper firms and perform in-sample and out-of-sample forecasts. For the out-of-sample analysis, our re-estimated Ohlson models correctly predict 93% of bankruptcy and non-bankruptcy outcomes.

Using an aggregate production function, the impact of runways at commercial airports on several measures of metropolitan statistical areas’ economic welfare in combination with labor, private capital, and public-sector capital is estimated. By focusing on runways at commercial airports, we estimate the impact of reducing congestion that sets in and takeoffs and landings as air activity nears the technical limit for safe operations. Both the number of runways and the maximum length of runway available at a given airport correlate positively with real gross metropolitan product with a negative cross product between the two, suggesting a trade-off between the number of flights possible and the size of the aircraft that can use the airport. Additional analysis examines the impact of additional runways on other measures of economic activity.

Based upon monthly California data, this exploratory analysis uses vector error correction methods and associated statistical tests to identify the long-run relationship and the short-run dynamics between highway exposure and crashes. The analysis finds that there is a cointegrating relationship between exposure and crashes, and for fatal, serious injury, and materials crashes, could not reject the hypothesis that crash exposure and frequency move proportionately. The analysis indicates that vector error correction models may be an important tool for improving our understanding of highway crashes and the near and longer term impacts of alternative safety policies.

The US paper and paperboard industry has experienced significant structural changes over the past 25 years, including reductions in the number of mills, lower rates of capacity growth, employment cutbacks and a loss of market share to foreign competitors. These structural shifts portray an industry that increasingly has difficulty adapting to a more competitive global environment. Based on aggregate data from 1965 to 1996, this article estimates a short-run translog (TL) cost function for the industry. The estimated model fits the data well and all sample points satisfy monotonicity and concavity conditions at all points. Among the findings, the industry operates at slightly increasing returns to capital utilization and labour and energy are Allen–Uzawa complements but Morishima substitutes in production. Technological progress generated 0.02% reduction in annual operating costs and consistent with an ailing US industry, estimated marginal costs approximated average operating costs until 1982 after which marginal costs significantly diverged from average operating costs.

The pulp and paper industry has experienced dramatic changes during the past several decades with large variations in world regional market shares of production capacity and consumption patterns. Based on panel data available (1961–2000) from the United Nations Food and Agricultural Organization, this paper estimates dynamic demand models for pulp and paper products in four major trading regions: Asia, Europe, the North American Free Trade Agreement Area, and South America. With or without price in the model, short-run demands are generally output inelastic. However, without price in the model, long-run output elasticities were more elastic, particularly in the Paper/Paperboard, Printing/Writing, and Household/Sanitary sectors with most elasticities greater than 1. With price included in the model, long-run demands were generally output inelastic, with primary exceptions being the Paper/Paperboard sector for all but the NAFTA region and Wrapping/Packaging for Asia and South America. Price was generally significant with long-run elasticities, in absolute value, in the (0.05, 0.11) range. And as a measure of urbanization, the percent of the population living in urban areas significantly affects consumption in total and in the Pulp and Printing/Writing sectors.

Special Issue Editorial

Highway safety is an important issue in both urban and rural areas.  Based upon a unique panel of incorporated cities over a 96-month period from January 1982 to December 1989, this paper evaluates the effects of the State of California’s ban on common site sales of gasoline and alcohol to curb drunk driving. Geographic information systems (GIS) contribute spatial variables to an analysis of the impact of the ban on several categories of alcohol related crashes: fatalities, serious injuries, and property damage. By considering the types of alcohol-related crashes for the five-county Los Angeles area as interrelated, a seemingly unrelated regression (SUR) model locates more precise impacts. Overall the ban appears to reduce fatalities, serious injuries, and property damage crashes; but in relatively less population dense cities, the ban increases property damage and may increase more serious crashes in some urban neighborhoods. This suggests that the ban discourages highly impaired drivers but may motivate less impaired drivers to travel to an alternate alcohol purchase site. Diverse experiences in adjacent municipalities warn large regional or nation-wide evaluations of highway safety to take care when adopting large region or state ‘fixed effect’ adjusters in analyses that presume sub-region homogeneity.

The increasing proportion of older persons in the population has significant implications for mobility in the US and the safety performance of the US highway system. Health problems, loss of dexterity, medication, and slower reaction times are among the factors that affect older–driver–involved highway safety. Based upon time–series data from January 1981 through December 1998 for California, this study estimates multiple order autoregression models to analyse highway crashes involving older drivers. The results indicate that risk exposure is an important determinant of highway safety, with the greatest effects on fatal crashes in total and on alcohol–related fatal crashes when at least one driver is over the legal limit. Other important factors include alcohol availability, hospital accessibility, and the proportion of older drivers. Alcohol–related legislation had little effect on older–driver crashes when at least one driver was over the legal blood alcohol concentration (BAC) limit and increasing speed limits to 70 mph decreased non–fatal injury crashes at the expense of fatal crashes.

Unlike any other book available, this collection uses a detailed analysis of econometric results from current transportation literature to provide an integrated collection of theory and application. Case studies are used to illustrate the economic principles developed, while testable hypotheses and economic results are highlighted throughout the text to provide a well-developed introduction to the foundations of transportation economics.

Short line railroads are critical to Georgia's transportation infrastructure and support the efficient movement of goods into and out of the State. Twenty-nine short line railroads operate in Georgia, six of which operate either partially or totally over 596 miles of rail track that the Georgia Department of Transportation (GDOT) owns. Based on the Bureau of Economic Analysis Regional Input-Output Modelling System (RIMS II) backward-linkage model, this study estimates the economic impacts associated with short line railroad revenues and with GDOT infrastructure spending on these six short line systems under different sets of assumptions. Among the economic impacts, and depending on the assumptions, the study finds that cumulatively, the six systems increase annual output in the range of $2.8 - $14.5 million, increase annual earnings in the range of $0.7 - $4.1 million, generate annual value-added in the range of $1.4 - $7.5 million, and annually add 10–93 jobs on average.

Private vehicle ownership has rapidly grown with China’s economic development and increasing incomes. This paper analyzes China’s provincial demands for private vehicles during the post-opening period 2000 – 2012. Based on estimates from pooled, fixed effects and Hausman-Taylor models, private vehicle ownership during this period grew at an average annual rate of over 20%, all else constant. The study focuses on the roles of economic, spatial, investment and regulatory factors in shaping private vehicle demands. The study finds that increases in GDP per capita and vehicle use cost reinforce and constrain, respectively, the strong trend toward increased ownership. And absent changes in population density, higher percentages of the population in urban areas increase the demand for private vehicles. But increasing population density provides stronger incentives for reducing vehicle demands. Municipal restrictions aimed at reducing the congestion and environmental effects of vehicle ownership and use are effective in reducing provincial demands. A separate analysis of provinces that are at least 60% urbanized identifies important differences. Vehicle demands are income elastic and infrastructure investments have stronger effects in the most urbanized provinces than in less urbanized provinces.

From a panel of fifty airports over a 13-year period, this research estimates a translog model of airport short-run operating costs. Output is departures and the effective number of 10,000 by 150 feet runways is a quasi-fixed factor of production. The analysis finds that airports operate under increasing returns to runway utilisation, input demand for general airport operations is price elastic, and inputs are Morishima substitutes in production. A residuals analysis suggests that air cargo, aeronautical and non-aeronautical services, and serving international travellers are important airport cost discriminators.

This paper examines North American pulp and paper company bankruptcies that occurred between 1990 and 2009. We demonstrate that shareholders suffer substantial losses (37%) during the month a bankruptcy occurs. Encouragingly, we show that financial ratios are useful in predicting firm failure and that failed firms are less profitable, more liquidity constrained and higher in debt leverage. Using a binary logit model in the spirit of Ohlson, we predict financial distress for pulp and paper firms 1 to 2 years ahead of the bankruptcy. We also adapt and re-estimate the empirical model on a sample of pulp and paper firms and perform in-sample and out-of-sample forecasts. For the out-of-sample analysis, our re-estimated Ohlson models correctly predict 93% of bankruptcy and non-bankruptcy outcomes.

Using an aggregate production function, the impact of runways at commercial airports on several measures of metropolitan statistical areas’ economic welfare in combination with labor, private capital, and public-sector capital is estimated. By focusing on runways at commercial airports, we estimate the impact of reducing congestion that sets in and takeoffs and landings as air activity nears the technical limit for safe operations. Both the number of runways and the maximum length of runway available at a given airport correlate positively with real gross metropolitan product with a negative cross product between the two, suggesting a trade-off between the number of flights possible and the size of the aircraft that can use the airport. Additional analysis examines the impact of additional runways on other measures of economic activity.

Based upon monthly California data, this exploratory analysis uses vector error correction methods and associated statistical tests to identify the long-run relationship and the short-run dynamics between highway exposure and crashes. The analysis finds that there is a cointegrating relationship between exposure and crashes, and for fatal, serious injury, and materials crashes, could not reject the hypothesis that crash exposure and frequency move proportionately. The analysis indicates that vector error correction models may be an important tool for improving our understanding of highway crashes and the near and longer term impacts of alternative safety policies.

The US paper and paperboard industry has experienced significant structural changes over the past 25 years, including reductions in the number of mills, lower rates of capacity growth, employment cutbacks and a loss of market share to foreign competitors. These structural shifts portray an industry that increasingly has difficulty adapting to a more competitive global environment. Based on aggregate data from 1965 to 1996, this article estimates a short-run translog (TL) cost function for the industry. The estimated model fits the data well and all sample points satisfy monotonicity and concavity conditions at all points. Among the findings, the industry operates at slightly increasing returns to capital utilization and labour and energy are Allen–Uzawa complements but Morishima substitutes in production. Technological progress generated 0.02% reduction in annual operating costs and consistent with an ailing US industry, estimated marginal costs approximated average operating costs until 1982 after which marginal costs significantly diverged from average operating costs.

The pulp and paper industry has experienced dramatic changes during the past several decades with large variations in world regional market shares of production capacity and consumption patterns. Based on panel data available (1961–2000) from the United Nations Food and Agricultural Organization, this paper estimates dynamic demand models for pulp and paper products in four major trading regions: Asia, Europe, the North American Free Trade Agreement Area, and South America. With or without price in the model, short-run demands are generally output inelastic. However, without price in the model, long-run output elasticities were more elastic, particularly in the Paper/Paperboard, Printing/Writing, and Household/Sanitary sectors with most elasticities greater than 1. With price included in the model, long-run demands were generally output inelastic, with primary exceptions being the Paper/Paperboard sector for all but the NAFTA region and Wrapping/Packaging for Asia and South America. Price was generally significant with long-run elasticities, in absolute value, in the (0.05, 0.11) range. And as a measure of urbanization, the percent of the population living in urban areas significantly affects consumption in total and in the Pulp and Printing/Writing sectors.

Special Issue Editorial

Highway safety is an important issue in both urban and rural areas.  Based upon a unique panel of incorporated cities over a 96-month period from January 1982 to December 1989, this paper evaluates the effects of the State of California’s ban on common site sales of gasoline and alcohol to curb drunk driving. Geographic information systems (GIS) contribute spatial variables to an analysis of the impact of the ban on several categories of alcohol related crashes: fatalities, serious injuries, and property damage. By considering the types of alcohol-related crashes for the five-county Los Angeles area as interrelated, a seemingly unrelated regression (SUR) model locates more precise impacts. Overall the ban appears to reduce fatalities, serious injuries, and property damage crashes; but in relatively less population dense cities, the ban increases property damage and may increase more serious crashes in some urban neighborhoods. This suggests that the ban discourages highly impaired drivers but may motivate less impaired drivers to travel to an alternate alcohol purchase site. Diverse experiences in adjacent municipalities warn large regional or nation-wide evaluations of highway safety to take care when adopting large region or state ‘fixed effect’ adjusters in analyses that presume sub-region homogeneity.

The increasing proportion of older persons in the population has significant implications for mobility in the US and the safety performance of the US highway system. Health problems, loss of dexterity, medication, and slower reaction times are among the factors that affect older–driver–involved highway safety. Based upon time–series data from January 1981 through December 1998 for California, this study estimates multiple order autoregression models to analyse highway crashes involving older drivers. The results indicate that risk exposure is an important determinant of highway safety, with the greatest effects on fatal crashes in total and on alcohol–related fatal crashes when at least one driver is over the legal limit. Other important factors include alcohol availability, hospital accessibility, and the proportion of older drivers. Alcohol–related legislation had little effect on older–driver crashes when at least one driver was over the legal blood alcohol concentration (BAC) limit and increasing speed limits to 70 mph decreased non–fatal injury crashes at the expense of fatal crashes.