On the Economics and Regulation of Smart Transportation Systems

Abstract

Technological advances in sensing, mobile communication, computation, imaging, artificial intelligence and many other fields have brought the city of tomorrow within reach. In that city, infrastructure and vehicles will be connected and automated; mobility services–from ground transportation to airborne services–will be readily accessible from smartphones and highly personalized thanks to an abundance of data; and sensors and cloud infrastructure will allow for constant monitoring and timely maintenance of infrastructure components. While this future is exciting, its concretization will disrupt our current way of life: the technologies and services enabling the city of tomorrow will first emerge in an environment that was not thought out or designed for them. This will create challenges both for the growth of these technologies but also to society as it seeks to integrate them. Naturally, these challenges raise an array of policy-relevant questions: what are the benefits of these new technologies? Do the benefits justify the costs of integration and disruption? Is the current regulatory ecosystem appropriate for the growth of beneficial technologies and, if not, how should it be adapted?

In this dissertation, by bringing together insights from economics, operations research and traffic science, I seek to address these policy concerns along two main thrusts.

In the first thrust, I investigate the optimal regulation of the ride-hailing industry in the age of uberization. Indeed, over the past decade, e-hailing transportation network companies such as Uber and Lyft have entered the ride-hailing industry and quickly grown in popularity. Naturally, this surge in popularity has resulted in the decline of street-hailing services. Faced with dwindling revenues, traditional taxi drivers have been calling for regulatory action, accusing e-hailing companies of unfair competition due to their unregulated status. Moreover, e-hailing services have been linked to an increase in congestion in a number of metropolitan cities. Regulators have, however, struggled to address both competition and congestion concerns in ways that promote efficiency and consumer welfare. Thus, I propose a model of the ride-hailing market that captures both competition between e-hailing and street-hailing services but also the effect of these services on congestion. My analysis shows that the emergence of e-hailing need not be a death sentence for street-hailing under appropriate regulatory and market conditions. More importantly, I show that a simple mechanism exists to address issues of unfair competition in the industry as well as of congestion, thus providing an avenue to simplify the host of regulations that have historically burdened the industry.

In the second thrust, I focus on the question of automated mobility and infrastructure services. The current approach to driving automation has been primarily vehicle-centric. However, despite tremendous spending on R&D, fully automated vehicles are still far from being a reality. In this context, a vehicle-infrastructure cooperative approach, in which infrastructure and vehicles cooperate to perform the different driving tasks, could emerge and be preferable. To study the implication of such a paradigm, I develop a model of an automated mobility market. In this market, consumers interact with both automakers and with infrastructure support service providers (ISSPs)–entities which provide automation services through road infrastructure–in order to find suitable mobility solutions. This model allows me to study the suitability of vehicle-infrastructure cooperation; the outcome of strategic interactions between ISSPs and automakers; and the implications for safety and liability should that market emerge.