Assessing Costs and Benefits of the Kaohsiung Rail System.

摘要

This dissertation assesses costs and benefits of two recent public rail transit systems in Kaohsiung, Taiwan's second largest city: Kaohsiung's mass rapid transit (MRT) system, which was completed and inaugurated in 2008 and Kaohsiung light rail transit (LRT) loop line, which is now under construction. I first focus on the benefits of the opening of Kaohsiung's MRT system as reflected in the price of apartments with elevators. I combine two stage least squares with geographically weighted regression to analyze transactions of apartments with elevators in 2007 and 2009. This approach allows accounting for the joint determination of time-on-market information (TOM) and price while allowing hedonic parameters to vary spatially. Results show that the opening of the MRT had a statistically significant and positive impact on the value of apartments with elevators. However, accounting for TOM has a negligible impact on my results.;Second, I apply the theory of real options to capture uncertainty in operating revenues and costs in the context of build-operate-transfer (BOT) and operate-transfer (OT) contracts for Kaohsiung's LRT loop line project. Unlike the traditional net present value (NPV) approach, real options analysis includes option values embedded in a project. Here, I rely on the binomial pricing approach to explore the value of the options to abandon and to expand the project. My findings show that the options to abandon or expand the LRT system are not sufficient to make a BOT contract attractive to a private firm, even under the best case scenario; however, accounting for the value of these options makes an OT contract at least 10% more attractive. These results show that accounting for uncertainty in large urban transportation projects can be important although the value of flexibility may not be sufficient to offset large construction costs.