A discrete choice framework for modeling and forecasting the adoption and diffusion of new transportation services

Abstract

Major technological and infrastructural changes over the next decades, such as the introduction of autonomous vehicles, implementation of mileage-based fees, carsharing and ridesharing are expected to have a profound impact on lifestyles and travel behavior. Current travel demand models are unable to predict long-range trends in travel behavior as they do not entail a mechanism that projects membership and market share of new modes of transport (Uber, Lyft, etc.). We propose integrating discrete choice and technology adoption models to address the aforementioned issue. In order to do so, we build on the formulation of discrete mixture models and specifically Latent Class Choice Models (LCCMs), which were integrated with a network effect model. The network effect model quantifies the impact of the spatial/network effect of the new technology on the utility of adoption. We adopted a confirmatory approach to estimating our dynamic LCCM based on findings from the technology diffusion literature that focus on defining two distinct types of adopters: innovator/early adopters and imitators. LCCMs allow for heterogeneity in the utility of adoption for the various market segments i.e. innovators/early adopters, imitators and non-adopters. We make use of revealed preference (RP) time series data from a one-way carsharing system in a major city in the United States to estimate model parameters. The data entails a complete set of member enrollment for the carsharing service for a time period of 2.5years after being launched. Consistent with the technology diffusion literature, our model identifies three latent classes whose utility of adoption have a well-defined set of preferences that are significant and behaviorally consistent. The technology adoption model predicts the probability that a certain individual will adopt the service at a certain time period, and is explained by social influences, network effect, socio-demographics and level-of-service attributes. Finally, the model was calibrated and then used to forecast adoption of the carsharing system for potential investment strategy scenarios. A couple of takeaways from the adoption forecasts were: (1) placing a new station/pod for the carsharing system outside a major technology firm induces the highest expected increase in the monthly number of adopters; and (2) no significant difference in the expected number of monthly adopters for the downtown region will exist between having a station or on-street parking.