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2 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Differentiated I nfrastructure Charging: A Com parison of Theory and - - PowerPoint PPT Presentation
Differentiated I nfrastructure Charging: A Com parison of Theory and - - PowerPoint PPT Presentation
VRIJE UNIVERSITEIT AMSTERDAM Differentiated I nfrastructure Charging: A Com parison of Theory and Practice Jasper Knockaert, Piet Rietveld Vrije Universiteit Amsterdam Christos Evangelinos, Bernhard Wieland Technische Universitt Dresden
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3 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
2 7 Case studies: – Airlines (5) – Shipping (8) – Railways (4) – Road Haulage (4) – Private Cars (6) Area covered: – Whole of the EU – Switzerland – Norway Methodology: – Factsheets – „Delphi“ Study (for the „positive theory aspect“)
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4 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Dim ensions of Price Differentiation Observed in the Case Studies: – Type of Vehicle – Type of User – Size of Vehicle – Time of Travel – Type of Infrastructure – Cargo Type – Place, Location of Link – Activity Level (mainly relevant for Ports) – Load Factor – Type of Fuel – Other
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5 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
2 4 6 8 10 12 14 16 18 type of vehicle type of user size of vehicle time type of infrastructure cargo type
- ther
place, location of link activity level load factor type of fuel number of cases Differentiation airlines shipping railways road haulage car drivers
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6 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
A Measure for the Degree of Differentiation of a given price structure: An intuitive first attem pt: Count the number of dimensions Counterargument: Two given price structures A and B may have the same amount of dimensions but A may be much more differentiated within one
- r more of these dimensions
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7 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Our ow n attem pt: 1 st step: Price Differentiation along dim ension num ber i : Di = 1-1/n with n = number of price levels, n > 0 2 nd step: Degree of Differentiation of price-structure A: DPA = ∑ Di Properties ( 1 st step) : – Two well defined extreme points (zero, unity) – Concave („the first additional price level adds more to differentiation than the 999th“) – Conforms to: Half of welfare maximum reached already with two price levels (Arnott, de Palma, Lindsey, 1993)
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8 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
n 1 Di 2
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9 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Obvious criticism : Implicit assumptions: – Dimensions equally „important“ – No correlation between dimensions – Why not one of the existing measures (Shannon-Entropy, Gini, etc.)? A further criticism – Looking at Differentiation in the sense defined may be misleading: – How to Control for Differences in the „Degree of Ambition“ of a Pricing Scheme (= the number of objectives being intended)?
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10 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Measure of „Degree of Am bition“ of a Pricing Schem e: Possible Objectives: – Economic Efficiency – Cost Coverage – Environmental Goals – Equity – Profits – Acceptability – Competitiveness – Safety – Legislative Requirements – Sustainability – Other
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11 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Degree of Ambition of a Pricing Scheme: Number of Objectives Inherent in a Pricing Scheme – Scale from 1-10 The following two Figures show a positive Trend between the two Measures
- f Differentiation and Ambition (as would be expected).
– The First Figure Shows all Case Studies – The Second Figure omits all cases where the Influence of Interest Groups plays a role (as reported in the Fact Sheets)
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12 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
1 2 3 4 5 6 7 1 2 3 4 5 6 7 8 9 10 differentiation ambition Differentiation Ambition airlines shipping railways road haulage car drivers
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13 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
1 2 3 4 5 6 7 3 4 5 6 7 8 9 10 differentiation ambition Optimal efficiency airlines shipping road haulage car drivers
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14 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
2,2 5 car drivers London City Centre 2,2 7 car drivers Stockholm City 2,4 4 railways German Railways 2,7 1 airlines Effects of differentiated charges at Airport Hamburg 3,0 5 shipping Scalloway, Shetland Islands 3,0 3 car drivers Trondheim road charge 3,0 8 railways France rail infra charge 3,5 4 shipping Port of Duisburg - (Duisport) 4,4 10 shipping Port of Valencia 4,4 5 shipping Lerwick - Shetland Islands 5,0 6 shipping Port of Gothenburg 5,1 7 shipping Port of Hamburg 6,6 6 shipping Port of Amsterdam
Degree of Differentiation Degree of Ambition Case Study Type Name of Case Study
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15 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
1 car drivers Rome road pricing 2 airlines Gran Canaria Airport 2 railways Rail infrastructure charges in Britain 2 airlines Madrid Barajas Airport 3 airlines London airports 0,7 3 car drivers Spitsmijden 1,2 2 railways Rail infrastructure charges in Austria 1,2 3 airlines Ljubljana Airport Case Study 1,6 5 shipping Sullom Voe, Shetland Islands 1,7 3 road haulage Swiss Heavy Vehicle Fee (HVF) 1,8 5 road haulage Brenner TEN-T (passenger) 1,9 5 road haulage Brenner TEN-T (freight) 2,0 6 car drivers Edinburgh road pricing 2,2 4 road haulage The German HGV Toll
Degree of Differentiation Degree of Ambition Case Study Type Name of Case Study
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16 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Results: – Substantial differences among modes – Highest degree of differentiation and ambition in the port cases (why?) – Urban congestion schemes intermediate (Counterintuitive? Cognitive Burden!) – No difference between freight and passenger
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17 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Hypotheses ( Exam ples) :
- A. Normative Economic Theory
A Confirmed Hypothesis: „When the costs of price differentiated charging mechanisms are high for the price setting agents, they will choose simple (cheaper charging mechanisms as second best strategies“ Not as trivial as it sounds! Correct for Degree of Ambition
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18 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
1 2 3 4 5 6 7 1 2 3 4 5 6 7 8 9 10 differentiation ambition Barriers charging mechanism is a barrier charging mechanism is not a barrier
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19 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Hypotheses ( ctd.) :
- A. Normative Economic Theory
A Refuted Hypothesis: „In the case of equity oriented pricing policies, the level of acceptance of pricing increases with the degree of differentiation“ – The four cases with the highest acceptability occur at all levels of differentiation – Lower levels of acceptability correspond to lower levels of differentiation
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20 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 3 4 5 6 7 8 9 10 differentiation ambition Acceptability & Equity Unacceptable (2) in between (3) Acceptable (4)
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21 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Hypotheses ( Exam ples) :
- B. Positive Economic Theory
Conjecture: „The degree of differentiation increases with increasing lobbying activity“ – Picture not quite clear – Too large range of differentiation
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22 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Lobby
1 2 3 4 5 6 7
No Yes
D e g r e e o f D i f f e r e n t i a t i o n
L o b b y i n g A c t i v i t i e s
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23 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Hypotheses ( Exam ples) :
- B. Positive Economic Theory
„If voting power of the dominant interest groups is high, the degree of differentiation tends to decrease; if voting power of the dominant interest groups is medium, the degree of differentiation tends to be high.“ No clear cut evidence for the case of low voting power
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24 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Political Power and Degree of Differentiation
1 2 3 4 5 6 7 Low Medium High
P o l i t i c a l P o w e r D e g r e e o f D i f f e r e n t i a t i o n
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25 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Possible Explanation: – High voting power: one interest group probably dominates → tariff structure reflects only welfare of this particular group → low differentiation – Intermediate level of voting power: small number of interest groups → policy makers try to achieve SIG equlilibrium → higher degree of differentiation – Seems to conform to Grossman-Helpman (2001, Chapter 7) model
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26 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM
Conclusions: Interesting research agenda: – The empirical analysis of tariff-structures – The political economy of tariff-structures ▪ 1st Best-4th Best Pricing ▪ Laffont (2000)-Programme
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27 Bernhard W ieland Christos Evangelinos Jasper Knockaert Piet Rietveld
VRIJE UNIVERSITEIT AMSTERDAM