Some aspects of random utility, extreme value theory and multinomial logit models

In this paper we give a survey on some basic ideas related to random utility, extreme value theory and multinomial logit models. These ideas are well known within the field of spatial economics, but do not appear to be common knowledge to researchers in probability theory. The purpose of the paper is to try to bridge this gap.Random utility theory; extreme value theory; multinomial logit models; entropy.

An agent-based computational approach to explaining persistent spatial unemployment disparities

This paper explores possible reasons for persistent spatial unemployment disparities using agent-based computational methods. The method relies on observing the actions of thousands of individuals within an artificial society. The paper models the effect of unemployment insurance, wage disparities, region specific amenities and innate residential preferences on regional labour market interactions, accounting for both migration and commuting. An empirical example of Rogaland county in south-west Norway is given, where unemployment disparities have proved remarkably persistent for decades. The model provides non-trivial insight into the nature of spatial unemployment disparities as well as making a valuable contribution to the policy debate.Unemployment insurance; wage disparities; region specific amenities; innate residential preferences; regional labour market interactions

Some aspects of random utility, extreme value theory and multinomial logit models

This is author's version of the article, pre-print.In this paper we give a survey on some basic ideas related to random utility, extreme value theory and multinomial logit models. These ideas are well known within the eld of spatial economics, but do not appear to be common knowledge to researchers in probability theory. The purpose of the paper is to try to bridge this gap

Stochastic Stackelberg equilibria with applications to time dependent newsvendor models

In this paper we prove a sufficient maximum principle for general stochastic differential Stackelberg games, and apply the theory to continuous time newsvendor problems. In the newsvendor problem a manufacturer sells goods to a retailer, and the objective of both parties is to maximize expected profits under a random demand rate. Our demand rate is an Ito-Levy process, and to increase realism information is delayed, e.g., due to production time. We provide complete existence and uniqueness proofs for a series of special cases, including geometric Brownian motion and the Ornstein-Uhlenbeck process, both with time variable coefficients. Moreover, these results are operational because we are able to offer explicit solution formulas. An interesting finding is that more precise information may be a considerable disadvantage for the retailer.Stochastic differential games; newsvendor model; delayed information; Ito-Levy processes

Congested Interregional Infrastructure, Road Pricing and Regional Labour Markets

Traffic congestion and the policies to combat it have been studied extensively. However, most studies neglect the labour market impacts of congestion. Many also fail to account for the simultaneity between commuting and migration. This paper models impacts such as unemployment disparities, changes in commuting flows and changes in the flow of migrants by adopting an agent based simulation approach. This approach has the strength that it allows the simultaneous consideration of commuting, migration and labour force participation decisions. The results obtained have important theoretical and policy implications and show how an "optimal" charge may, in fact, be sub-optimal.Congestion; Road pricing; Agent-based approach; Spatial interaction; Infrastructure investment

The spatial transferability of parameters in a gravity model of commuting flows

This paper studies whether gravity model parameters estimated in one geographic area can give reasonable predictions of commuting flows in another. To do this, three sets of parameters are estimated for geographically proximate yet separate regions in south-west Norway. All possible combinations of data and parameters are considered, giving a total of nine cases. Of particular importance is the distinction between statistical equality of parameters and `practical' equality i.e. are the differences in predictions big enough to matter. A new type test best on the Standardised Root Mean Square Error (SRMSE) and Monte Carlo simulation is proposed and utilised.Gravity model; commuting flows; regional science

Adjusting for Cell Suppression in Commuting Trip Data

Maximum entropy methods are used to infer the true trip-distribution matrix in cases where parts of the data are suppressed due to privacy concerns. Large proportions of the suppressed data are found to be inferred correctly when the marginal totals in the trip distribution are known. Entropy-based approaches are further found to outperform a strategy of ignoring suppressed information in cases with suppressed marginal totals and/or a higher cut-off value of suppressing cell information. Our methods are demonstrated to reduce the systematic bias in estimates of the distance deterrence parameter to such small numbers that it is effectively zero, preventing potentially serious bias in estimates and predictions resulting from standard spatial interaction models. Another useful contribution is to identify what scenarios an entropy-maximization approach benefits from incorporating information on times series and/or information on distances in the transportation network

The impact of pecuniary costs on commuting flows

In western Norway, fjords cause disconnections in the road network, necessitating the use of ferries. In several cases, ferries have been replaced by roads, often part-financed by tolls. We use data on commuting from a region with a high number of ferries, tunnels and bridges. Using a doubly-constrained gravity-based model specification, we focus on how commuting responds to varying tolls and ferry prices. Focus is placed on the role played by tolls on infrastructure in inhibiting spatial interaction. We show there is considerable latent demand, and suggest that these tolls contradict the aim of greater territorial cohesion.Commuting flows; pecuniary costs

Modeling Freight Markets for Coal

In this paper we study bulk shipping of coal between the central regions in the world. We compare the performance of cost-minimizing models with a gravity model approach. The main finding in the paper is that cost minimizing models provide relative poor fits to data. A simple one parameter gravity model, however, provides very satisfactory fits to observed behaviour.Bulk freight; cost efficiency; gravity modeling

Mixed contracts for the newsvendor problem with real options

In this paper we consider the newsvendor model with real options. We consider a mixed contract where the retailer can order a combination of q units subject to the conditions in a classical newsvendor contract and Q real options on the same items. We provide a closed form solution to this mixed contract when the demand is discrete and study some of its properties. We also offer an explicit solution for the continuous case. In particular we demonstrate that a mixed contract may be superior to a real option contract when a manufacturer has a bound on how much variance she is willing to accept.Newsvendor model; real options; discrete demand; mixed contract