IDEAS home Printed from https://ideas.repec.org/p/hhs/oruesi/2012_013.html
   My bibliography  Save this paper

A Note on High-Speed Rail Investments and Travelers’ Value of Time

Author

Listed:
  • Hultkrantz, Lars

    (Department of Business, Economics, Statistics and Informatics)

Abstract

High-Speed Rail (HSR) is designed for travelers with high value of time. HSR offer fast and reliable services and good possibilities for work during the journey. Surprisingly, these benefits of HSR investment proposals are often appraised by use of travel-time valuations of people who use conventional (intercity) train services. The standard approach builds on two major assumptions, linearity of demand, and that the value of time is unchanged between the “before” and “after” alternatives, i.e., that change in the average value of time of passengers can be ignored. While the first of these is well known, the second is not always observed. However, the spread of values of time between individual travelers is large and is an essential motivation for HSR investments. This note therefore considers whether the assumption that the value of time remains unchanged by the speed improvement induces any significant bias in the appraisal. We first use a modal-mix model where travelers have varying value of time to outline some conceptual points and then discuss to what extent these may affect the social profitability of three recently constructed or proposed HSR lines: Oslo- Stockholm (Norway and Sweden), Stockholm-Göteborg (Sweden) and Beijing-Shanghai Hongqiao (China). We conclude that a RoHbased evaluation of an HSR line should be complemented by a sensitivity analysis of how the outcome is affected by possible changes of the composition of travelers with different values of time.

Suggested Citation

  • Hultkrantz, Lars, 2012. "A Note on High-Speed Rail Investments and Travelers’ Value of Time," Working Papers 2012:13, Örebro University, School of Business.
    • Handle: RePEc:hhs:oruesi:2012_013
    as

    Download full text from publisher

    File URL: https://www.oru.se/globalassets/oru-sv/institutioner/hh/workingpapers/workingpapers2012/wp-13-2012.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mackie, P.J. & Jara-Díaz, S. & Fowkes, A.S., 0. "The value of travel time savings in evaluation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(2-3), pages 91-106, April.
    2. Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, vol. 66(2), pages 407-414, May.
    3. Gerard De Jong & Andrew Daly & Marits Pieters & Toon Van der Hoorn, 2005. "The logsum as an evaluation measure - review of the literature and new results," ERSA conference papers ersa05p158, European Regional Science Association.
    4. Lyons, Glenn & Jain, Juliet & Holley, David, 2007. "The use of travel time by rail passengers in Great Britain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(1), pages 107-120, January.
    5. Vicente Inglada & GinÊs de Rus, 1997. "Cost-benefit analysis of the high-speed train in Spain," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 31(2), pages 175-188.
    6. Wen-Chyuan Chiang & Jason C.H. Chen & Xiaojing Xu, 2007. "An overview of research on revenue management: current issues and future research," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 1(1), pages 97-128.
    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. Jiang, Changmin & D'Alfonso, Tiziana & Wan, Yulai, 2017. "Air-rail cooperation: Partnership level, market structure and welfare implications," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 461-482.
    2. Börjesson, Maria & Eliasson, Jonas, 2014. "Experiences from the Swedish Value of Time study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 59(C), pages 144-158.

    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. Román, Concepción & Martín, Juan Carlos & Espino, Raquel & Cherchi, Elisabetta & Ortúzar, Juan de Dios & Rizzi, Luis Ignacio & González, Rosa Marina & Amador, Francisco Javier, 2014. "Valuation of travel time savings for intercity travel: The Madrid-Barcelona corridor," Transport Policy, Elsevier, vol. 36(C), pages 105-117.
    2. Cohen-Blankshtain, Galit, 2021. "On another track: Differing views of experts and politicians on rail investments in peripheral localities," Journal of Transport Geography, Elsevier, vol. 95(C).
    3. Ofelia Betancor & Gerard Llobet, 2015. "Contabilidad Financiera y Social de la Alta Velocidad en Espana," Studies on the Spanish Economy eee2015-08, FEDEA.
    4. Olsson, Nils O.E. & Økland, Andreas & Halvorsen, Siri B., 2012. "Consequences of differences in cost-benefit methodology in railway infrastructure appraisal—A comparison between selected countries," Transport Policy, Elsevier, vol. 22(C), pages 29-35.
    5. Harvey, Joan & Thorpe, Neil & Caygill, Matthew & Namdeo, Anil, 2014. "Public attitudes to and perceptions of high speed rail in the UK," Transport Policy, Elsevier, vol. 36(C), pages 70-78.
    6. Susilo, Yusak O. & Lyons, Glenn & Jain, Juliet & Atkins, Steve, 2013. "Rail passengers’ time use and utility assessment: 2010 findings from Great Britain with multivariate analysis," Working papers in Transport Economics 2013:18, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    7. Jinhyun Hong & David Philip McArthur & Mark Livingston, 2019. "Can Accessing the Internet while Travelling Encourage Commuters to Use Public Transport Regardless of Their Attitude?," Sustainability, MDPI, vol. 11(12), pages 1-10, June.
    8. Meissner, Joern & Strauss, Arne, 2012. "Network revenue management with inventory-sensitive bid prices and customer choice," European Journal of Operational Research, Elsevier, vol. 216(2), pages 459-468.
    9. Hirte, Georg & Tscharaktschiew, Stefan, 2018. "The impact of anti-congestion policies and the role of labor-supply margins," CEPIE Working Papers 04/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    10. Tim Paul Thomes, 2010. "Vertically Related Markets of Collective Licensing of Differentiated Copyrights with Indirect Network Effects," Jena Economics Research Papers 2010-056, Friedrich-Schiller-University Jena.
    11. Emanuele Bacchiega & Olivier Bonroy & Emmanuel Petrakis, 2018. "Contract contingency in vertically related markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 772-791, October.
    12. Ma, Jie & Tse, Ying Kei & Wang, Xiaojun & Zhang, Minhao, 2019. "Examining customer perception and behaviour through social media research – An empirical study of the United Airlines overbooking crisis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 192-205.
    13. Holz-Rau, Christian & Scheiner, Joachim, 2011. "Safety and travel time in cost-benefit analysis: A sensitivity analysis for North Rhine-Westphalia," Transport Policy, Elsevier, vol. 18(2), pages 336-346, March.
    14. Maria Börjesson & Jonas Eliasson & Mattias Lundberg, 2014. "Is CBA Ranking of Transport Investments Robust?," Journal of Transport Economics and Policy, University of Bath, vol. 48(2), pages 189-204, May.
    15. Rosa M. González-Marrero & Rosa M. Lorenzo-Alegría & Gustavo A. Marrero, 2011. "Los Efectos Territoriales de las Infraestructuras: La inversión en redes de alta velocidad ferroviaria," Economic Reports 05-2011, FEDEA.
    16. Nebiyou Tilahun & David Levinson, 2013. "Selfishness and altruism in the distribution of travel time and income," Transportation, Springer, vol. 40(5), pages 1043-1061, September.
    17. Aguiléra, Anne & Guillot, Caroline & Rallet, Alain, 2012. "Mobile ICTs and physical mobility: Review and research agenda," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(4), pages 664-672.
    18. João Vareda, 2007. "Unbundling and Incumbent Investment in Quality Upgrades and Cost Reduction," Working Papers 31, Portuguese Competition Authority.
    19. Picard, Pierre M. & Okubo, Toshihiro, 2012. "Firms' locations under demand heterogeneity," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 961-974.
    20. Bouzahzah, Mohamed & Esmaeili, Hamid & Ihadiyan, Abid, 2007. "Ouverture commerciale et migration," L'Actualité Economique, Société Canadienne de Science Economique, vol. 83(1), pages 71-90, mars.

    More about this item

    Keywords

    Cost-benefit analysis; rule-of-a-half; high-speed rail;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hhs:oruesi:2012_013. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ieoruse.html .

    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.