IDEAS home Printed from https://ideas.repec.org/a/pal/jmarka/v5y2017i3d10.1057_s41270-017-0025-3.html
   My bibliography  Save this article

Declining transportation funding and need for analytical solutions: dynamics and control of VMT tax

Author

Listed:
  • Pratik Verma

    (University of Nevada)

  • Shaurya Agarwal

    (California State University)

  • Pushkin Kachroo

    (University of Nevada)

  • Anjala Krishen

    (University of Nevada)

Abstract

There is a growing concern among policy makers and analysts regarding the mismatch between demand and supply of the revenue for improving and maintaining highway infrastructure. One possible solution is to link actual vehicle miles traveled (VMT) to the fee structure. The main objective of this paper is to model VMT dynamics and establish a methodology for designing an optimal VMT tax rate. The paper proposes a novel model for VMT dynamics and estimates the model parameters using historical data. An optimal control problem is then formulated by designing a cost function which aims to maximize the generated revenue while keeping the tax rate at a reasonable rate. Using optimal control theory, a solution is provided to this problem. Steady-state analysis of this model is provided and simulations are performed for the 50-year period showing the projected VMT, generated revenue, and the optimal tax rate. The model provides a parameter in the cost function which can be adjusted for achieving a certain amount of revenue in a given time frame.

Suggested Citation

  • Pratik Verma & Shaurya Agarwal & Pushkin Kachroo & Anjala Krishen, 2017. "Declining transportation funding and need for analytical solutions: dynamics and control of VMT tax," Journal of Marketing Analytics, Palgrave Macmillan, vol. 5(3), pages 131-140, December.
    • Handle: RePEc:pal:jmarka:v:5:y:2017:i:3:d:10.1057_s41270-017-0025-3
    DOI: 10.1057/s41270-017-0025-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41270-017-0025-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1057/s41270-017-0025-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Starr McMullen, B. & Zhang, Lei & Nakahara, Kyle, 2010. "Distributional impacts of changing from a gasoline tax to a vehicle-mile tax for light vehicles: A case study of Oregon," Transport Policy, Elsevier, vol. 17(6), pages 359-366, November.
    2. Hensher, David A. & Puckett, Sean M., 2005. "Road user charging: The global relevance of recent developments in the United Kingdom," Transport Policy, Elsevier, vol. 12(5), pages 377-383, September.
    3. Stephen Ison & Tom Rye, 2005. "Implementing Road User Charging: The Lessons Learnt from Hong Kong, Cambridge and Central London," Transport Reviews, Taylor & Francis Journals, vol. 25(4), pages 451-465, October.
    4. Merriss, John & Krukar, Milan, 1982. "A Proposal for an Axle Weight- Distance road user charge," 23rd Annual Transportation Research Forum, New Orleans, Louisiana, October 28-30, 1982 311533, Transportation Research Forum.
    5. de Palma, André & Lindsey, Robin, 2007. "Chapter 2 Transport user charges and cost recovery," Research in Transportation Economics, Elsevier, vol. 19(1), pages 29-57, January.
    6. Clifford Winston, 1991. "Efficient Transportation Infrastructure Policy," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 113-127, Winter.
    7. Sumalee, Agachai & May, Tony & Shepherd, Simon, 2005. "Comparison of judgmental and optimal road pricing cordons," Transport Policy, Elsevier, vol. 12(5), pages 384-390, September.
    8. Ian W. H. Parry & Kenneth A. Small, 2005. "Does Britain or the United States Have the Right Gasoline Tax?," American Economic Review, American Economic Association, vol. 95(4), pages 1276-1289, September.
    9. Wachs, Martin, 2003. "A Dozen Reasons for Raising Gasoline Taxes," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt2000f8t0, Institute of Transportation Studies, UC Berkeley.
    10. Alex Anas & Robin Lindsey, 2011. "Reducing Urban Road Transportation Externalities: Road Pricing in Theory and in Practice," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 66-88, Winter.
    11. Anjala S. Krishen & Maria Petrescu, 2017. "The world of analytics: interdisciplinary, inclusive, insightful, and influential," Journal of Marketing Analytics, Palgrave Macmillan, vol. 5(1), pages 1-4, March.
    12. Saleh, Wafaa, 2005. "Road user charging: Theory and practice," Transport Policy, Elsevier, vol. 12(5), pages 373-376, September.
    13. Maria Petrescu & Anjala S. Krishen, 2017. "Marketing analytics: from practice to academia," Journal of Marketing Analytics, Palgrave Macmillan, vol. 5(2), pages 45-46, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anjala S. Krishen & Maria Petrescu, 2018. "Analytics from our scholarly closets: the connections between data, information, and knowledge," Journal of Marketing Analytics, Palgrave Macmillan, vol. 6(1), pages 1-5, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vonk Noordegraaf, Diana & Annema, Jan Anne & van Wee, Bert, 2014. "Policy implementation lessons from six road pricing cases," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 172-191.
    2. Yang, Di & Kastrouni, Eirini & Zhang, Lei, 2016. "Equitable and progressive distance-based user charges design and evaluation of income-based mileage fees in Maryland," Transport Policy, Elsevier, vol. 47(C), pages 169-177.
    3. Tscharaktschiew, Stefan, 2014. "Shedding light on the appropriateness of the (high) gasoline tax level in Germany," Economics of Transportation, Elsevier, vol. 3(3), pages 189-210.
    4. Proost, Stef & Van Dender, Kurt, 2012. "Energy and environment challenges in the transport sector," Economics of Transportation, Elsevier, vol. 1(1), pages 77-87.
    5. Tscharaktschiew, Stefan & Reimann, Felix, 2021. "On employer-paid parking and parking (cash-out) policy: A formal synthesis of different perspectives," Transport Policy, Elsevier, vol. 110(C), pages 499-516.
    6. Caplan, Arthur J. & Acharya, Ramjee, 2019. "Optimal vehicle use in the presence of episodic mobile-source air pollution," Resource and Energy Economics, Elsevier, vol. 57(C), pages 185-204.
    7. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt5841z3kx, Institute of Transportation Studies, UC Davis.
    8. Dumortier, Jerome & Zhang, Fengxiu & Marron, John, 2017. "State and federal fuel taxes: The road ahead for U.S. infrastructure funding," Transport Policy, Elsevier, vol. 53(C), pages 39-49.
    9. Welch, Timothy F. & Mishra, Sabyasachee, 2014. "A framework for determining road pricing revenue use and its welfare effects," Research in Transportation Economics, Elsevier, vol. 44(C), pages 61-70.
    10. Nicholas Janusch & Stephan Kroll & Christopher Goemans & Todd L. Cherry & Steffen Kallbekken, 2021. "Learning to accept welfare-enhancing policies: an experimental investigation of congestion pricing," Experimental Economics, Springer;Economic Science Association, vol. 24(1), pages 59-86, March.
    11. Lindsey, Robin, 2012. "Road pricing and investment," Economics of Transportation, Elsevier, vol. 1(1), pages 49-63.
    12. Delucchi, Mark, 2007. "Do Motor-Vehicle Users in the US Pay Their Way?," Institute of Transportation Studies, Working Paper Series qt2884w7km, Institute of Transportation Studies, UC Davis.
    13. Lucas W. Davis & James M. Sallee, 2020. "Should Electric Vehicle Drivers Pay a Mileage Tax?," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 65-94.
    14. Evangelinos, Christos & Tscharaktschiew, Stefan & Marcucci, Edoardo & Gatta, Valerio, 2018. "Pricing workplace parking via cash-out: Effects on modal choice and implications for transport policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 369-380.
    15. Li,Shanjun & Xing,Jianwei & Yang,Lin & Zhang,Fan, 2020. "Transportation and the Environment : A Review of Empirical Literature," Policy Research Working Paper Series 9421, The World Bank.
    16. Velaga, Nagendra R. & Pangbourne, Kate, 2014. "Achieving genuinely dynamic road user charging: issues with a GNSS-based approach," Journal of Transport Geography, Elsevier, vol. 34(C), pages 243-253.
    17. DE BORGER, Bruno & PROOST, Stef, 2015. "Tax and regulatory policies for European transport - getting there, but in the slow lane," Working Papers 2015009, University of Antwerp, Faculty of Business and Economics.
    18. Starr McMullen, B. & Zhang, Lei & Nakahara, Kyle, 2010. "Distributional impacts of changing from a gasoline tax to a vehicle-mile tax for light vehicles: A case study of Oregon," Transport Policy, Elsevier, vol. 17(6), pages 359-366, November.
    19. Schubert, Daniel & Sys, Christa & Vanelslander, Thierry & Roumboutsos, Athena, 2022. "No-queue road pricing: A comprehensive policy instrument for Europe?," Utilities Policy, Elsevier, vol. 78(C).
    20. Langer, Ashley & Maheshri, Vikram & Winston, Clifford, 2017. "From gallons to miles: A disaggregate analysis of automobile travel and externality taxes," Journal of Public Economics, Elsevier, vol. 152(C), pages 34-46.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:jmarka:v:5:y:2017:i:3:d:10.1057_s41270-017-0025-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.