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

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

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The shipper must pay a transport bill of (1-,15 )Tig in<br />

ot days. This is also discounted to make comparable all<br />

elements of the analysis:<br />

(!*1-)4<br />

Discounted net revenue will be:<br />

(20). ClInet<br />

Profits are:<br />

Q.4 ;CP<br />

(21). -rr 127(11,.".(1-ebCt.1..—(1-"Yrti.<br />

(1-014<br />

■■•<br />

(22). PR<br />

19(41)<br />

The net discounted marginal revenue function is thus:<br />

net<br />

' t<br />

CI-AT<br />

Equating (22) to f t (Q) and solving <strong>for</strong> Q and varying one<br />

of JP , o. , i, T, and a (changes in a will measure<br />

parallel shifts in the market demand curve), while holding the<br />

other constant, will yield the various demand curves <strong>for</strong><br />

13<br />

transport.<br />

Probability distributions <strong>for</strong> the variables T, i, a,<br />

boC. , and A could also be considered. These would not<br />

alter the analysis seriously and would affect the model as<br />

they did under pure competition.<br />

13 See Appendix to Chapter II, note 7.<br />

37

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