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Research Roundup, November 2017: New Tech, Regulatory Frameworks, and Economic Outcomes

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*The Research Roundup is a semi-regular list of outside research we have found interesting and think is worth sharing. The views and conclusions of the papers’ authors do not necessarily reflect the opinions of anyone affiliated with TPI.*

This edition of Research Roundup highlights a study of differences in travel patterns between shared autonomous vehicles (SAVs) and human-driven vehicles (HVs). Researchers at the University of Texas at Austin and IVT, in Zurich, Switzerland developed a large-scale micro-simulation of transit patterns in and around Austin and randomly assigned fare levels. They found clear differences. People traveling longer distances preferred SAVs to HVs. People who did not own a HV preferred SAVs for all of their travel to public transit, walking, or bicycling. The authors’ concluded that SAVs have the potential to disrupt transportation markets, particularly taxi cabs and public transit. They find that SAV ridership is particularly price-sensitive, suggesting that regulation of fares is likely to have a large effect on SAV development.

(Click through to the full post to see the abstract and link to this paper and 8 others on topics from the future of work to virtual reality in policy planning.)

 

Tracking a System of Shared Autonomous Vehicles Across the Austin, Texas, Network Using Agent-Based Simulation

Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics

Impacts of Low Citizen Awareness and Usage in Smart City Services: The Case of London’s Smart Parking System

Investigating the Role of Virtual Reality in Planning for Sustainable Smart Cities

Standardization for the Digital Economy

Analyzing the Impact of Regulation on Disruptive Innovations: The Case of Wireless Technology

Technology, Employment, and Skills

Labor Policy and Digital Technology Use: Indicative Evidence from Cross-Country Correlations

Digital Innovation and the Distribution of Income


Descriptions of papers below are edited abstracts from authors

 
 

Tracking a System of Shared Autonomous Vehicles Across the Austin, Texas, Network Using Agent-Based Simulation
Jun Liu, Kara M. Kockelman, Patrick M. Boesch, Francesco Clar
Autonomous vehicles (AVs) may begin to transform surface transportation systems in the next few years. Implications of mobility and sustainability benefits of SAVs are discussed in the paper, as are dangers for traditional transit operators.

Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics
Erik Brynjolfsson, Daniel Rock, Chad Syverson
We live in an age of paradox. Systems using artificial intelligence match or surpass human-level performance in more and more domains, leveraging rapid advances in other technologies and driving soaring stock prices. Yet measured productivity growth has declined by half over the past decade, and real income has stagnated since the late 1990s for a majority of Americans. We describe four potential explanations for this clash of expectations and statistics: false hopes, mis-measurement, redistribution, and implementation lags. While a case can be made for each, we argue that lags have likely been the biggest contributor to the paradox. The most impressive capabilities of AI, particularly those based on machine learning, have not yet diffused widely. More importantly, like other general purpose technologies, their full effects won’t be realized until waves of complementary innovations are developed and implemented. The required adjustment costs, organizational changes, and new skills can be modeled as a kind of intangible capital. A portion of the value of this intangible capital is already reflected in the market value of firms. However, going forward, national statistics could fail to measure the full benefits of the new technologies and some may even have the wrong sign.

Impacts of Low Citizen Awareness and Usage in Smart City Services: The Case of London’s Smart Parking System
Guo Chao Alex Peng, Miguel Baptista Nunes, Luqing Zheng
Smart city applications and services are increasingly considered as strategic means to cope with emerging global challenges such as climate change, pollution, the aging population, and energy shortage. In particular, smart parking is a type of smart services used to improve traffic congestion and pollution within cities. Nevertheless, although smart city services are driven by advanced information technologies, their success is highly dependent on user engagement, which is historically problematic. This paper presents and discusses the results of a case study on the smart parking service in London. A questionnaire (involved a total of 212 local drivers) was adopted as the main data collection method. This was complemented by the collection and analysis of 470 online user comments left for the service. The results showed that London’s smart parking service may potentially help each driver to save an average of £68 (62.2 l) on petrol annually and reduce CO2 emissions by 238.14 kg per car per year. At the city level, a smart parking system could help London save £183.6 million worth of petrol per year and reduce its annual CO2 emissions by 642,978 tons. However, public awareness, actual usage, and user satisfaction of this smart service are currently very low. These present substantial barriers to realizing the potential economic and environmental benefits of the service. This paper concluded that further to the very technological efforts, local authorities and service providers need to make a stronger endeavor to enhance public engagement and user satisfaction towards smart services, in order to realize the promises of such solutions.

Investigating the Role of Virtual Reality in Planning for Sustainable Smart Cities
Elmira Jamei, Michael Mortimer, Mehdi Seyedmahmoudian, Ben Horan, Alex Stojcevski
With rapid population growth, urban designers face tremendous challenges to accommodate the increasing size of the population in urban areas while simultaneously considering future environmental, social, and economic impacts. A “smart city” is an urban development vision that integrates multiple information and communication technologies to manage the assets of a city, including its information systems, transportation systems, power plants, water supply networks, waste management systems, and other community services provided by a local department. The goal of creating a smart city is to improve the quality of life of citizens by using technology and by addressing the environmental, social, cultural, and physical needs of a society. Data modeling and data visualization are integral parts of planning a smart city, and planning professionals currently seek new methods for real-time simulations. The impact analysis of “what-if scenarios” frequently takes a significant amount of time and resources, and virtual reality (VR) is a potential tool for addressing these challenges. VR is a computer technology that replicates an environment, whether real or imagined, and simulates the physical presence and environment of a user to allow for user interaction. This paper presents a review of the capacity of VR to address current challenges in creating, modeling, and visualizing smart cities through material modeling and light simulation in a VR environment. This study can assist urban planners, stakeholders, and communities to further understand the roles of planning policies in creating a smart city, particularly in the early design stages. The significant roles of technologies, such as VR, in targeting real-time simulations and visualization requirements for smart cities are emphasized.

Standardization for the Digital Economy
Björn Lundqvist
This article discusses several aspects of the Digital Economy. First, the data industry and the business conduct of the approaching Internet of Things are presented. Second, the current standardization efforts promoted by the European Commission are discussed, for example, what the challenges are, how much should be standardized, and how prestandard consortia should be judged. Third, current and future competition law issues for the Digital Economy, in reference to standardization, are identified. The article states joint technology consortia for upper-layer standards, i.e. in the ecosystems, should benefit from heightened scrutiny under Article 101 of the Treaty on the Functioning of the European Union (TFEU), while system leaders’ business conduct in the Digital Economy may be judged in reference to Article 102 TFEU. The article concludes that the main issue under general competition law in the Data Economy, at its current stage of development, is to create a level playing field by trying to facilitate the implementation of the Internet of Things. Thus, competition authorities should be cautious about the current ecosystem consortia-driven standard-setting movement in the Digital Economy, while also facilitating the application of Article 102 TFEU when system leaders possibly abuse their dominance by not giving access to their respective ecosystems.

Analyzing the Impact of Regulation on Disruptive Innovations: The Case of Wireless Technology
Dmitrii Trubnikov
The paper analyses the role of regulation in suppressing disruptive innovations and shows that this process might be explained by the joint evolution of regulation and the mainstream technology. Industrial policy in highly regulated industries such as wireless telecommunications is able to support the evolution of established technologies and adjust to innovations. We observe more innovation in telecommunications in which the regulator is less active. The paper argues that innovation could be bolstered if crucial industry resources were accessible to a number of potential innovators and newcomers.

Technology, Employment, and Skills
Valeria Cirillo
This article investigates the relationships between technological change and employment considering the dynamics of four major professional groups – Managers, Clerks, Craft and Manual workers – defined on the basis of ISCO classes. The aim is to move beyond skill-biased and task-based views of the impact of technical change on skills and to identify the structural determinants of employment changes. A model is developed explaining changes in jobs as a result of changes in demand – total, domestic and foreign –, wages, and the importance of innovation in products and processes and the role of the international fragmentation of production. The empirical analysis is carried out on manufacturing and service industries of major European countries over the 2000–2014 period. Results show that moving from aggregate employment to the dynamics of professional groups major diversities emerge; managers – for instance – are the main beneficiaries from product innovations, while clerks, craft, and manual workers are negatively affected by the introduction of new processes. Separate estimations are also carried out for high and low tech industries and for Northern and Southern European countries, identifying a variety of ways in which patterns of innovation and structural change affect jobs in specific professional groups.

Labor Policy and Digital Technology Use: Indicative Evidence from Cross-Country Correlations
Truman G. Packard, Claudio E. Montenegro
This paper exploits variation in country-level indicators drawn from published data to analyze the relationship between labor regulation and the use of digital technology. The analysis shows a statistically and economically significant association between digital technology use by firms and a country’s statutory minimum wage and employment protection regulations. The results are robust to the inclusion of controls for level of development, economic stability, available infrastructure, and trade openness. To ensure the broadest country coverage, the paper develops new indexes of employment protection, using the World Bank’s Doing Business indicators, which allow several aspects of labor market regulation—such as restrictions on hours and hiring, dismissal procedures, and severance costs–to be analyzed separately.

Digital Innovation and the Distribution of Income
Dominique Guellec, Caroline Paunov
Income inequalities have increased in most OECD countries over the past decades; particularly the income share of the top 1%. In this paper, we argue that the growing importance of digital innovation – new products and processes based on software code and data – has increased market rents, which benefit disproportionately the top income groups. In line with Schumpeter’s vision, digital innovation gives rise to ”winner-take-all” market structures, characterized by higher market power and risk than was the case in the previous economy of tangible products. The cause for these new market structures is digital non-rivalry, which allows for massive economies of scale and reduces costs of innovation. The latter stimulates higher rates of creative destruction, leading to higher risk as only marginally superior products can take over the entire market, hence rendering market shares unstable. Instability commands risk premia for investors. Market rents accrue mainly to investors and top managers and less to the average workers, hence increasing income inequality. Market rents are needed to incentivize innovation and compensate for its costs, but beyond a certain level, they become detrimental. Public policy may stimulate innovation by reducing ex-ante the market conditions which favor rent extraction from anti-competitive practices.