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Estimating the Option Value of managed lanes

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  • Lee, Sunghoon
  • Burris, Mark W.

Abstract

The option value of managed lanes (MLs) refers to the value travelers' place on having MLs as a backup option for possible use in the future, even if they are not using the MLs for their current trip. This research used detailed travel data from Katy Freeway MLs and general purpose lanes (GPLs) in Huston to estimate the option value of MLs. Based on these data, this research recommends ML option users to be defined as only those travelers who used MLs at least once a year as opposed to all travelers who could have used the MLs (even those who never used MLs).

Suggested Citation

  • Lee, Sunghoon & Burris, Mark W., 2018. "Estimating the Option Value of managed lanes," Research in Transportation Economics, Elsevier, vol. 70(C), pages 28-36.
    • Handle: RePEc:eee:retrec:v:70:y:2018:i:c:p:28-36
    DOI: 10.1016/j.retrec.2018.07.016
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    References listed on IDEAS

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    1. Kathleen M. Painter & Robert Douglas Scott II & Philip R. Wandschneider & Kenneth L. Casavant, 2002. "Using Contingent Valuation to Measure User and Nonuser Benefits: An Application to Public Transit," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(2), pages 394-409.
    2. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    3. Justin Chang & Soo Cho & Beom Lee & Yonghwan Kim & Suk Yun, 2012. "A dichotomous choice survey for quantifying option and non-use values of bus services in Korea," Transportation, Springer, vol. 39(1), pages 33-54, January.
    4. Chang, Justin S., 2010. "Estimation of option and non-use values for intercity passenger rail services," Journal of Transport Geography, Elsevier, vol. 18(2), pages 259-265.
    5. Sunil Patil & Mark Burris & W. Douglass Shaw & Sisinnio Concas, 2011. "Variation in the value of travel time savings and its impact on the benefits of managed lanes," Transportation Planning and Technology, Taylor & Francis Journals, vol. 34(6), pages 547-567, June.
    6. Ian J. Bateman & Richard T. Carson & Brett Day & Michael Hanemann & Nick Hanley & Tannis Hett & Michael Jones-Lee & Graham Loomes, 2002. "Economic Valuation with Stated Preference Techniques," Books, Edward Elgar Publishing, number 2639.
    7. Laird, James & Geurs, Karst & Nash, Chris, 2009. "Option and non-use values and rail project appraisal," Transport Policy, Elsevier, vol. 16(4), pages 173-182, August.
    8. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
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    Cited by:

    1. Xun Zheng & Tomio Miwa, 2019. "A Comparative Analysis on Residents’ Reservation Willingness for Bus Service Based on Option Price," Sustainability, MDPI, vol. 11(1), pages 1-12, January.

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    More about this item

    Keywords

    Contingency value; Managed lanes; Option value;
    All these keywords.

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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