UC Irvine

This dissertation contains three chapters in urban and transportation economics. The first chapter analyzes the flight-frequency choices of a monopoly airline serving a hub-and-spoke network with asymmetric demands. In the 3-city hub-and-spoke network, demand is allowed to differ across markets. Analysis is done separately for two distinct passenger types: those who assign zero cost to layovers, and those who assign a very high cost. Both cases result in a higher flight frequency on the higher-demand spoke. Using a simulation, the flight-frequency choices for the two models are compared, and results show that the difference between the flight-frequency choices on the high and low demand spokes is smaller in the high-cost-layover case than in the zero-cost case.

The second chapter continues investigating airline economics by studying airline response in the event of a government shutdown. A shutdown creates a negative demand shock for airlines as government employees no longer travel for work and citizens cannot visitgovernment sites for either work or recreational purposes. This analysis attempts to estimate the effect of this demand shock on traffic as well as the responding fare changes. Evidence suggests that, for every percent of the labor force in endpoint cities attributed to federal employees, carriers lose about 35 passengers per month on non-stop flight segments, and fares are found to be $3.11 lower on average in quarters where shutdowns occur.

Finally, chapter three uses empirical data to conduct a foundational study on Accessory Dwelling Units (ADUs). With cities across the United States facing a housing shortage, ADUs offer a unique development strategy to fill low-density residential zones. This paper examines ADUs in Los Angeles to discover what housing and location factors contribute tohomeowners’ decision to construct an ADU. The analysis finds that larger homes on lots with higher land value – though not necessarily larger lots – tend to encourage more ADU construction. The paper then investigates the effect of an ADU on property value. An instrumental variable approach is used by exploiting a California law that removed several barriers to ADU permits. Results suggest that addition of an ADU increases the property value of a parcel by about 56 percent.