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

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others. The usual estimating equation is a simple linear or log-linear
equation which expresses the quantity carried by a certain mode of
transportation as a function of the rate charged by that mode, perhaps
the rates charged by competing modes of transport and, usually, several
exogenous variables. This simple procedure is beset with several tech-
nical difficulties. First of all, the estimation of a single demand
equation is a touchy matter. Unless the estimating equation is derived
from a sound, and valid, theory we cannot be certain that the demand
relation will actually be captured. A supply curve may be estimated
or we may estimate some combination of the two curves. This indeter-
minacy is compounded when we desire to estimate two or more separate
but interrelated demand functions. We must first weed out the supply
influences and then separate the demand influences by mode. These are
very difficult problems. In short, simple estimation procedures which
deal with single demand functions for several modes of transport may
(1) not capture the demand influences at all, and/or (2) not discrimi-
nate between the modal demands in a meaningful manner.
We have attempted to overcome these difficulties by constructing
an economic model of the transportation market which takes account of
the influences of several separate modal supply curves and then de-
riving our estimating equations directly from this model. This pro-
cedure has been only partially successful. In order to construct a
model which at least partially reflects the real world we have had to
introduce the associated costs of transportation. These costs differ
for each mode of transport and have not been captured in any of the data
collected thus far. Therefore, it has been impossible to estimate our
entire model and, in general, we have not been able to derive estimates
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