12:00
Ioannis Tikoudis (VU University Amsterdam)

Second-best road pricing in polycentric settings with distorted labor markets.
The paper presents a polycentric commuting model with congestion externalities, distortionary labor taxation and suboptimal provision of public transport, calibrated in order to loosely refer to key empirical regularities of the regional economy and transport system of Randstad conglomeration. In line with earlier research on optimal road pricing under parallel distortions (land and labor markets), the model predicts that a system of non-differentiated cordon tolls around the four largest cities of Randstad can cause significant welfare losses (roughly  75€ per household annually). In contrast, under a differentiated pricing scheme, i.e. a system of different cordon charges, the above result is reversed: large welfare gains are possible, even in the absence of any sophisticated revenue-recycling program (public transport subsidies, distortionary tax cuts). The numerical findings suggest that in a network economy, the degree of substitutability between a labor tax and a road toll is much lower compared to an abstract representation of it (absence of public transport, monocentric city, fixed household location etc). Thus, policies which in an abstract model appear as naïve (e.g. lump-sum recycling of toll revenue) may, with some modification, provide the basis for correct intervention when considered in a polycentric network. An extensive sensitivity analysis is employed to determine the strength of this result. 
Field: spatial economics

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12:45
Sylvia Bleker (VU University Amsterdam)

Asymmetric nested logit: an application to electric vehicle demand
Electric vehicles (EV’s) demand lags behind demand for standard gasoline cars. The literature explains the difference by the high selling price, caused by high production costs and lower willingness to pay due to range anxiety. In this paper we investigate whether industry structure also contributes to the demand difference.

We use a nested multinomial logit model, where products are grouped into nests by technology. To isolate the effect of industry structure, we keep the variants in the market constant, while we vary the amount of firms producing them. By allowing firms to be asymmetrical, we add to the literature on the NMNL in general, which usually assumes symmetrical firms.

We compute implicit analytical equilibria and explicit numerical equilibria for each market structure and compare EV demand and welfare. The implicit analytical solution for the profit mark-up takes the form of an adjusted Lerner-index, showing that when a firm offers products in multiple nests, its markup increases. The numerical analysis shows EV demand is higher in market structures where the EV variant is sold by a specialized firm, as opposed to a firm also selling ICV products. Finally, we present a statistic that can be used to predict which market structure will be best for total welfare. Competition agencies can use this information to, for example, analyze whether a proposed merger has a positive of negative effect on total welfare. Since the model is relatively general, these results apply to any market that can be accurately described by the nested logit model. 
Field: spatial economics

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13:45

Zhiling Wang (VU University Amsterdam)

Cultural Diversity and Cultural Distance as Choice Determinants of Migrants’ DestinationsThis study analyzes the impact of cultural composition on regional attractiveness from the perspective of migrant sorting behavior. We use an attitudinal survey to quantify cultural distances between natives and immigrants in the area concerned and estimate the migrants’ varying preferences for both cultural diversity and cultural distance. To account for regional unobserved heterogeneity, our econometric analysis employs artificial instrumental variables, as developed by Bayer et al. (2004). The main conclusions are twofold. On the one hand, cultural diversity turns out to be an attractor for migrants, a finding also confirmed by previous research. On the other hand, average cultural distance greatly weakens regional attractiveness, even when controlled for the presence of network effects. 
Field: Spatial Economics