Transportation Research Part A | co-authored with Jan K. Brueckner Download Paper
Service frequency is an important element of service quality in freight transportation, increasingly so with the adoption of just-in-time production. This paper develops an analytical model of how frequency, along with price, is chosen by competitive freight carriers. In the model, the 'full price' of transport services faced by a shipper (a goods producer) includes the actual shipping price plus an 'inventory holding cost', which is inversely proportional to the frequency of shipments offered by the freight carrier. A key assumption of the model is idiosyncratic 'brand loyalty' on part of shippers, which results in monopolistic competition between freight carries. Accounting for brand loyalty, competing freight carriers maximize profit by setting prices, frequencies and vehicle carrying capacities. Assuming tractable functional forms, long- and short-run comparative-static analysis is carried out. The results show that when inventory holding costs increase, service frequency rises while shipping price falls. Furthermore, an efficiency analysis shows that equilibrium frequency is higher than the socially optimal level. Lastly, the paper provides a possible explanation for the phenomenon of excess capacity in freight services due to the existence of a minimum vehicle-size constraint.
Journal of Regional Science Download Paper
About 37 percent of the urban population in developing and less developed countries lives in slums, and a significant proportion are squatters, who do not own or pay rent for the land that they occupy. This paper presents an economic theory of squatter settlements on government-owned land. It adds to the existing literature of squatting on private land by explicitly modeling squatting on public land. In the model, a 'squatter-organizer' optimally controls squatting so as to forestall eviction. The existence of an 'eviction cost' leads formal residents to tolerate squatting, forsaking part of public 'open space' occupied by squatters in order to avoid paying taxes to cover the cost of evicting them. Under some functional-form assumptions, the paper derives the comparative-static effects of the model's parameters on the organizer's choice variables. While the organizer controls the size of the squatter population in the basic version of the model, the analysis is extended to examine free-migration of squatters into the city. Incorporating additional stylized facts, a model is constructed that combines squatting on public and private land, which can be particularly useful for empirical research. Lastly, the paper carries out a policy analysis highlighting conditions for possible Pareto-improving squatter formalization.
Working Paper Download Paper
The paper contributes to the literature by providing descriptive evidence regarding slum housing in Indonesia. The empirical exercise exploits the rich stock of household-level information available in the Indonesian Family Life Survey (IFLS) conducted in 1993-94. The main goal is to analyze correlations between socio-economic attributes of households (like income, education, family size, marital status, religion) and slum-like dwelling characteristics, structural quality; the presence of electricity, water, sanitation and other basic services, and cleanliness in and around the dwelling. A set of probit regressions estimates the probability that a household with certain attributes lives in a dwelling with slum-like characteristics. Another set of probit regressions estimates the relative willingness-to-pay for dwelling characteristics of different household-types. This latter set of regressions shows that income and, more interestingly, education are important determinants of willingness-to-pay. These effects are in line with the results from the former regressions, which estimate higher probabilities for poor and less-educated households to be living in slum-like dwellings. The estimates for willingness-to-pay based on family size are mostly ambiguous, although the former regressions clearly indicate that larger families are less likely to live in slum-like dwellings. Lastly, the paper explores the relationship between dwelling quality and mental health.