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

CHAPTER V
SUMMARY AND CONCLUSIONS
Researchers engaged in the estimation of demand relationships recog-
nize that goods and services usually exist which are close substitutes
for those they are directly investigating. However, this recognition
is seldom transformed into action. Ideally, these substitute goods
should be dealt with in the estimation process. One common and easy
method is to enter the prices of these goods in the demand equations.
Usually this is done in a very ad hoc manner with little consideration
given to what the estimated coefficients may actually represent.
This approach is perhaps most common in the field of transporta-
tion. Observing many transportation links and networks which are served
by two or more modes of transport, most people believe these modes are
substitutes for one another, more or less perfect, depending upon the
level of their "quality of service differentials." However, most
attempts to estimate the demand for these transport modes are hampered
by an inability, or a lack of desire, to explicitly deal with this
substitutability.
This paper has attempted to construct an economic model of a
transportation market. We employed traditional economic methods and
used as our starting point the derived demand for transportation. By
quantifying the variables usually considered as determinants of quality
of service, and expressing these as costs associated with shipment by
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