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Accessibility and uncertainty : An empirical analysis of option value in transport

Bondemark, Anders LU ; Johansson, Erik and Kopsch, Fredrik LU (2021) In Journal of Transport and Land Use 14(1). p.463-477
Abstract

Are there option values for transport services? A few studies have tried to answer this question through various stated preference methods, but we do not know much about its magnitude in different contexts. In this paper, we summarize the theory on option value, present previous empirical work concerning transport, and discuss its links to accessibility. Accessibility can be seen as the end product of the transport system, and the argument we pursue is that option value is a component of accessibility. Therefore, estimations of the option value ought to be connected to the marginal accessibility change of an optional transport mode. The concept of substitutability has the potential to meet this criterion. It is the degree to which an... (More)

Are there option values for transport services? A few studies have tried to answer this question through various stated preference methods, but we do not know much about its magnitude in different contexts. In this paper, we summarize the theory on option value, present previous empirical work concerning transport, and discuss its links to accessibility. Accessibility can be seen as the end product of the transport system, and the argument we pursue is that option value is a component of accessibility. Therefore, estimations of the option value ought to be connected to the marginal accessibility change of an optional transport mode. The concept of substitutability has the potential to meet this criterion. It is the degree to which an alternative trip can replace an initially preferred trip, or, put differently, how accessibility at a location is composed. We conduct an empirical application to test whether the variation in housing transaction prices is associated with substitutability. We find that housing prices are higher where the accessibility is built up by several transport modes, given any level of total accessibility. We interpret this as households, on average, are willing to pay a risk premium to keep optional transport modes available.

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publishing date
type
Contribution to journal
publication status
published
subject
in
Journal of Transport and Land Use
volume
14
issue
1
pages
15 pages
publisher
University of Minnesota
external identifiers
  • scopus:85106936308
ISSN
1938-7849
DOI
10.5198/JTLU.2021.1783
language
English
LU publication?
yes
id
9029117f-810c-4df6-8b66-e25f9859827a
date added to LUP
2021-06-17 10:24:09
date last changed
2022-04-27 02:31:00
@article{9029117f-810c-4df6-8b66-e25f9859827a,
  abstract     = {{<p>Are there option values for transport services? A few studies have tried to answer this question through various stated preference methods, but we do not know much about its magnitude in different contexts. In this paper, we summarize the theory on option value, present previous empirical work concerning transport, and discuss its links to accessibility. Accessibility can be seen as the end product of the transport system, and the argument we pursue is that option value is a component of accessibility. Therefore, estimations of the option value ought to be connected to the marginal accessibility change of an optional transport mode. The concept of substitutability has the potential to meet this criterion. It is the degree to which an alternative trip can replace an initially preferred trip, or, put differently, how accessibility at a location is composed. We conduct an empirical application to test whether the variation in housing transaction prices is associated with substitutability. We find that housing prices are higher where the accessibility is built up by several transport modes, given any level of total accessibility. We interpret this as households, on average, are willing to pay a risk premium to keep optional transport modes available.</p>}},
  author       = {{Bondemark, Anders and Johansson, Erik and Kopsch, Fredrik}},
  issn         = {{1938-7849}},
  language     = {{eng}},
  number       = {{1}},
  pages        = {{463--477}},
  publisher    = {{University of Minnesota}},
  series       = {{Journal of Transport and Land Use}},
  title        = {{Accessibility and uncertainty : An empirical analysis of option value in transport}},
  url          = {{http://dx.doi.org/10.5198/JTLU.2021.1783}},
  doi          = {{10.5198/JTLU.2021.1783}},
  volume       = {{14}},
  year         = {{2021}},
}