Book Reviews

Economic Impacts of Intelligent Transportation Systems: Innovations and Case Studies

E. Bekiaris and Y.J. Nakanishi, editors
Elsevier
July 2004, 655 pages
ISBN 0762309784
$95  €150  £100

This new addition to the series, Research in Transportation Economics, is dedicated to the economic valuation of intelligent transportation systems (ITS) and telematics. The editors include the papers of close to 50 authors, thus ensuring comprehensive coverage of the topic. ITS technologies typically have short life cycles; they are rapidly evolving and have minimal historical data associated with them. Recognizing that ITS life cycles and cost structures differ greatly from that of regular infrastructure, techniques to address these issues are presented. The book covers a wide range of ITS technologies, including freeway management, electronic toll collection, advanced driver assistance systems, and traveler information systems.

The introductory chapter of this book recaps the goals and objectives of ITS as envisioned in landmark legislation. The chapter presents a Mitretek (2003) compilation of recent cost-benefit analysis that draws on experiences up to 2003. Also provided are definitions for acronyms directly downloaded from an ITS architecture website. Distinctly absent, however, is a critique of ITS implementations over the past two decades. This type of discussion would have given the readers some perspective on the topic.

The section on "Relevant Technologies and Market" identifies the marketplace for various ITS technologies. Two articles are included: the first, by Panou and Bekiaris, puts forth a taxonomy of technologies into clusters in the United States and overseas; the second, by Kauber, assesses the emerging markets through 2010.

The centerpiece of the volume is really the section on "Evaluation Technologies/Methodologies," commanding no less than 120 pages. Aside from traditional techniques such as cost-benefit analysis, I am pleased to see contributions on "Analytical Alternatives" (Haynes and Li), and I am equally delighted to see microsimulation being used in evaluating "Variable-Message-Signs Route Guidance" (Ozbay and Bartin).

While the methodologies section is cut and dried, the articles in the "Case Studies" sections make them come to life. They include:

• Incident Freeway Management,
• Electronic Toll Collection and Commercial Vehicle Operation,
• Public Transport, and
• Advanced Driver Assistance Systems (ADAS) and Driver/Traveler Information.

Aside from the "Evaluation Technologies/Methodologies" section, I view these 300 pages among the most useful parts of the book, covering the key components of ITS.

In the section on "Assessing the Impact of ITS on the Overall Economy," Kawakami et al. put forth a compact general equilibrium model to measure the implications of ITS. Gillen et al. evaluate the productivity gains from using Automatic Vehicle Location. I would have liked to have seen more contributors in this section, because it addresses a key objective of this volume; in fact it is the basic premise of the book.

Among the finishing touches, the book includes policy recommendations. Again, I rank this section of the book very highly. I am particularly partial to the guidelines laid down for implementations. For example, recommendations are made by Bekiaris et al. for two ADAS technology clusters: advanced cruise control and intelligent speed adaptation.

I am a bit disappointed, however, with the brevity of the conclusions chapter, which says nothing new or important. Considering the richness of the contributions of so many authors, surely the editors could have summarized them better and in more detail.

I am also disappointed in the lack of a subject index, which discounts the usefulness of the book. More importantly, it reinforces the impression that there is only a limited amount of editorial oversight.

Overall, this is a welcome addition to the Research in Transportation Economics series. Many of the 50 authors included in the volume are respected figures in this field, and the separate papers provide much useful information. Integrating the chapters into a book entitled Economic Impacts of ITS, however, falls a bit short of my expectations.

Reference

Mitretek Systems. 2003. ITS Benefits and Costs: 2003 Update, prepared for the Federal Highway Administration, U.S. Department of Transportation.

Reviewer address: Yupo Chan, Professor and Founding Chair, Department of Systems Engineering, University of Arkansas at Little Rock, 2801 South University, Little Rock, AR 72204-1099. Email: yxchan@ualr.edu.

Principles of Transport Economics

Emile Quinet and Roger Vickerman
Edward Elgar Publishing Company
2004, 385 pages
ISBN 1-84064-865-1
$120 hardback ($60 paperback)
£75 hardback (£35 paperback)

Instructors of upper-level undergraduate transportation economics courses have typically been frustrated searching for a suitable textbook. The traditional transportation books are long on institutional description and short on analytical method. A recent pair of books attempted to remedy this. Kenneth Boyer's Principles of Transportation Economics (Addison Wesley, 1998, $124.40) is well written but pitched at too low a level for students who have completed intermediate microeconomics. Patrick McCarthy's Transportation Economics (Blackwell, 2001, $108.95) is the opposite. There is too much detail for a typical undergraduate who is not specializing in transportation, and it is a tough read in places. In my class, I have been using José Gómez-Ibáñez, William Tye, and Clifford Winston's edited volume Essays in Transportation Economics and Policy: A Handbook in Honor of John R. Meyer (Brookings Institution, 1999, at the attractive price of $22.95 in paperback), which is a mixed bag and really does not function as a textbook.

To this mix is added a new text by Quinet and Vickerman. Actually, it is an updated English-language version of an earlier book in French by Quinet. The addition of Vickerman from England has given the book a more pan-European feel. The limitation of nearly all applied economics texts is that their examples are parochial. European students have limited interest in the detailed economics of the Mackinac Straits bridge in Michigan or the Lindenwold transit line in Philadelphia, and conversely the Channel Tunnel and the externality costs of truck traffic in Switzerland do not stir the imagination of American students. Therefore, Quinet and Vickerman face a tough task in breaking into the North American market.

The book is divided into three sections. The first fifth (in terms of pages) deals with putting transportation in its wider context in relation to economic activity, location theory, and urban economics. The next quarter deals with the basics of demand and cost. The remaining pages cover market equilibrium, market failure, and public policy intervention.

Overall, I consider the book to be a pedagogical failure. For example, within the first 40 pages there is a quick gallop through price elasticities (page 17), cost functions and the envelope theorem (page 27), and the throw away parenthetical comment on page 37 while discussing a model of interregional trade that "there is no trade initially (infinite transport costs)." All of this while the reader has yet to be introduced to basics of transportation demand and supply.

With my students, I consider it to be a major success if they can interpret and use elasticities, understand how a cost function is derived and estimated, and fully understand the role of transportation in trade equilibria and how a demand function for freight transportation can be derived. This book is not supportive of the crucial material that I feel is essential for my students to understand. While the first section contains important concepts, I felt that the material could have been better organized, and perhaps combined with topics covered later in the book, to produce a more logical and instructive narrative.

I found the second section dealing with demand and costs to be the strongest part of the book. The chapter on demand contains a particularly good description of the underpinning of traditional four-stage demand models. However, it deals with pure theory. There is no discussion of the practical econometrics of estimation or any empirical results. This is in contrast to McCarthy's text that has extensive practical discussion of this topic. However, the most amazing thing is that after 45 pages of discussing passenger demand models, freight traffic models are considered in under a page. Of course, this is not entirely the authors' fault. The profession has not lavished the attention on freight demand models the way that it has for passenger movement. This is a sad state of affairs in the North American context given the importance of freight railroads and competition with trucks, barges, and pipelines.

The chapter on costs is also quite good and discusses social costs as well as production costs. To my tastes, I felt there should have been a more extensive industrial organization-style analysis of production costs. After all, production costs drive firm behavior and market equilibrium. For example, on page 147 there is only passing reference to the difference between economies of firm size, economies of density, and economies of scope. And the discussion is based on ill-defined equations and not supported by any intuition. Yet, with my students, I find that driving home these distinctions produces greater appreciation of the differences between transportation modes and the debate concerning regulatory reform.

The final section of the book is a random walk through market equilibria and public policy. Again the book fails pedagogically by giving short shrift to important tools in transportation economics. Concepts such as Ramsey pricing (in the cost chapter, page 153), an undefined "Mohring effect" (also in the cost chapter, page 158), cost-benefit analysis (page 239), and reaction functions and the conduct parameter (page 266) are all mentioned in passing but not given the full treatment that undergraduates require. Overall, the chapters in the final section of the book are adequate and cover most of the important issues. However, I felt they lacked a structure that students could use to guide their studies.

Overall, one can say that the book touches on all of the topics usually found in an upper level transportation economics course, however, the ordering of material detracts from the learning experience. One can always quibble about the organization of the material, and I would accept that this is partly a matter of taste, and there will be deficiencies in almost any ordering. However, I would suggest that McCarthy and (especially) Boyer have got it right by using the structure of a typical intermediate microeconomics textbook as a guide to a logical sequence of topics.

The other failure of this book is in explaining and illustrating the principal tools of transportation economics in a way that undergraduates would find useful. One might consider that there are three main types of academic writing that do not report original research results. One is a handbook chapter presenting core reference material for a knowledgeable new researcher in a field. The second is a "handbook chapter on steroids" prepared for knowledgeable insiders and published in places such as the Journal of Economic Literature. The third is textbook writing designed for newcomers to the field who only have basic economic training. The authors of this book have failed; they have pitched the book somewhere in the middle and thereby satisfied none of the three markets.

How did this happen? The basic problem is that the market for a post-intermediate microeconomics text on transportation is very small. Publishers are, therefore, unwilling to invest resources in extensive use of referees, prepublication testing in a classroom setting, copy editors, graphic designers, and the preparation of end-of-chapter exercises. Edward Elgar, the publisher of this book, is not a major player in the mass-market textbook publishing business. Consequently the authors did not get the feedback they should have received at an early stage that would have allowed them to make this a more pedagogically useful tool.

Reviewer address: Ian Savage, Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston IL 60208, USA. Email: ipsavage@northwestern.edu.