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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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these concepts are combined in a discussion of the two-mode transpor-<br />

.<br />

tation market with quality differentials and the conditions necessary'<br />

<strong>for</strong> the occurrence -of a modal split.' - ' •<br />

Figures 3.1 through 3.4 illustrate the Claseical derivation of<br />

the demand curve <strong>for</strong> transportation-<strong>for</strong> the special case in which all -<br />

•<br />

curves are linear. 1 In Fig. 3.1 we have the demand and supply condi-<br />

tions in two markets, Market A on the left and Market B on the right<br />

side, <strong>for</strong> some commodity. These markets are assumed to be isolated<br />

from each other. Under this restriction the equilibrium prices and '<br />

quantities are observed as P a and . Qa in Market A and Pb and Qb in Market<br />

B. Since the market price in B is higher', in isolated equilibrium, than<br />

0<br />

Qa Qb<br />

Fig. 3.1 -- Two-Market Isolated Equilibrium<br />

1. This first set of diagrams may<br />

<strong>for</strong> example: Samuelson, op. cit., or<br />

Demand <strong>for</strong> Transport Service," Waseda<br />

48-59.<br />

be found in,many sources. See,<br />

S. Kobe, "Elasticity of Derived<br />

Economic Papera, Vol. III (1959),<br />

•<br />

37

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