MIS 9003 – Prof. Min-Seok Pang

Cheng et al. (2018)-Siddharth Bhattacharya

The paper talks about traffic congestion and how in spite of effort and big investments by government congestion still remains a big problem both due to pollution(lots of greenhouse emissions etc) and economically(time value of money lost by people stuck in traffic).Thus as an alternative to transportation infrastructure policy makers have started using ITS( Intelligent Transportation Systems).While the government still spends large amounts of money on transportation a very small amount is spent on ITS.Thus the paper asks the question that  Do intelligent transportation systems help mitigate traffic congestion and if so how?The authors use  a unique panel dataset with 99 urban areas (metropolitan statistical areas or MSA) across the U.S. from 1994 to 2014 focusing on the  511 Traveler Information Systems that have been adopted across  all major US states.Using a difference in difference framework the authors find several notable results.First,the authors find that  ITS does significantly reduce traffic congestion(the average commuter saves  2.57% of her commuting time and 2.86% in extra costs due to traffic congestion). The adoption of 511 Systems is also associated with a decrease in fuel consumption by 50.05 million gallons of gasoline and 10.31 billion pounds of CO2 in greenhouse emissions each year nationally.The results are robust to alternative specifications and endogeneity concerns (instruments,relative time model,sub-sample analysis etc make the results robust)These findings not only demonstrate a significant economic impact of ITS but also highlight its cost-effectiveness in mitigating traffic congestion compared to road expansion.The authors also perform a cost benefit analysis showing that the savings due to ITS is 35 times that of total investment made over the previous decade.The paper also delves into what are the underlying mechanisms that 511 system is associated with and shows that while on the demand side the adoption of such systems leads to  changes in: (i) individual travel behaviors, (ii) choices on navigation routes, (iii) travel time uncertainty, and (iv) choices on work-trip transportation modes,on the supply side these systems interact with road expansion and public transit to manage traffic and mitigate traffic congestion.
The paper contributes to the  emerging literature on the societal impacts of IT.It also  contribute to the IS literature on IT value creation by showing the role of ITS in traffic management and congestion mitigation.It also contributes to the  “Green IT” literature and  transportation economics literature and integrates IS with transportation literature  by shedding light on the increasing role of IT in the transportation sector.The research also has implications for policy makers in that they can leverage ITS to develop a capability in traffic management and supply-and-demand coordination.The study  also shows that ITS increases social welfare not only in terms of economic savings but also environmental sustainability.

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