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

lower than air rates. It rises more rapidly because the
value of time or cost of capital tied up in shipment is
based on a fixed percentage of the value of the commodities.
(Also other costs such as warehousing and damage which are
higher by sea than air have a positive relationship to
value). According to this appraoch, shippers of the k th
commodity would be indifferent between the two modes. The
k + 1,...,n commodities would go exclusively by air, and
the remaining ones exclusively by sea.
A discriminant model based on the above logic was
applied to the sample of 459 commodities with results that
were neither very good nor very bad. That such an applica-
tion could even be contemplated was due to the fact that
343 of the commodity groups actually involved exclusive
mode choice, 66 going entirely by air and 277 going entirely
by sea. This is a surprising result, given the degree of
heterogeneity within most seven digit groups. It is a
result that supports the basic approach to transport demand
which the theoretical section of the dissertation developed.
A second experiment, involving an application of
ordinary regression techniques to the entire sample was
also performed. Here the dependent variable was percent
of total tonnage of a given commodity group that went by
air. The results were poor. The diagram below explains
why this is the case.
78 .
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