Q2 Z2,(Q2) Z2(Q2) - Institute for Water Resources - U.S. Army

Table 4.33 contains the derived ratio estimates. Reduced form
estimation was also carried out for STCC groups 23, 35, 36 and 37.
Table 4.33 also contains the ratio estimates for these groups. Their
reduced form parameter estimates are contained in Tables 4.39 through
4.42.
The Ratios b m /b r may be used to compare elasticities in the follow-
ing manner. Suppose that the two markets of interest are five hundred
miles apart. From Tables 4.35 through 4.38 we derive estimates of rate
ratios, T:/T:, for the commodity groups. These turn out to be 0.475,
0.525, 0.643 and 0.872 for groups 26, 29, 30 and 32 respectively. Mul-
tiplying these by the ratios of b m/b r then yields the ratio of the
elasticities. These are 0.086, 0.525, 0.129 and 0.150. Thus, for
markets five hundred miles apart, we estimate the elasticity of trans-
port demand with respect to the truck rate to range from twice the
elasticity with respect to the rail rate for Petroleum and Coal Products
to twenty times the elasticity with respect to the rail rate for Stone,
Clay and Class Products.
The elasticity of Q with respect to the rail rate is
T r
T Ob
r
r m
E ■ — ■ — .
Q,T r
r
QrQZ
aTr
Similarly, the elasticity of Q with respect to the motor rate is
Hence
T r
T r Ob
m mr
E r •--
Q,T QrQZ
m aT
m
E r
Q,T T r b
r r m
E r
Q,T T r b r
m m
140