Collaborative Research: Urban Goods Movements, Pricing, and Social Justice

This NSF grant will explore urban goods movements, pricing, and social justice through numerical experiments. The experiments will be based on a new family of urban freight models, in lieu of expensive field measurements. In addition to creating the family of urban freight models, we plan to use them to investigate five primary hypotheses: (1) urban freight quality of service may be enhanced through traffic network and route reconfiguration. (2) urban neighborhoods with persistent, chronically inferior urban freight service sometimes emerge spontaneously, but their impact may be substantially ameliorated through incentivizing and subsidizing freight service providers. (3) The present demand for goods provisioned by large, publicly traded electronic retailers might not be sustainable because of their current use of internal subsidies and hidden costs to fund extremely low shipping fees, creating an unfunded liability through which investors sacrifice profits for market share. (4) When subsidies are scaled down and hidden shipping costs are made explicit, deleterious impacts on carriers, e-retailers and households may arise. (5) Food underserved areas (FUAs) arise from the combination of relatively low demand for and relatively high supply chain costs of healthy food items. The presence of food desserts is a serious social injustice that brings daily harm to those members of society who cannot find alternative sources of affordable, quality food.

The intended family of urban freight models will be explicitly dynamic and based on game theory. The models will depict the role urban freight systems in electronic commerce at the household level, including explicit recognition of food deliveries. A careful experimental design will be followed in assessing the aforementioned hypotheses. Accordingly, the intended family of models, as well as the experiments to assess hypotheses, will address the following considerations: (1) urban freight carriers compete with one another, not only for market share but also for urban routes and parking that are also valued by commuters and hired ride services; (2) there is an undeniable dynamic aspect to the flows of vehicles and consumption goods over metropolitan road networks; moreover, those flows involve multiple time scales that make the comparative statics paradigm nearly meaningless; (3) in an effort to be competitive, electronic retailers (e-retailers) are drawn into pricing games that purposely blur the distinction between delivery fees and the prices of purchased goods, with the consequence that it is necessary to simultaneously model both freight service and urban goods provisioning; (4) indirect evidence exists that pricing strategies employed in e-commerce do not fully cover delivery costs; (8) some electronic retailers offer discounted and promotional shipping rates, creating unfunded liabilities that bring into doubt both the medium- and long-term sustainability of their core transactions; and (9) there is a gap between the demand for healthy foods and the minimum order size that makes it worthwhile for food purveyors to deliver to certain neighborhoods, thereby creating food underserved areas.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.