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

with the transport demand curve, is not identical with one of the
supply curves.
curves.
The culmination of our geometrical model is presented in Fig. 3.7
where we have two modes supplying transport services with differing
levels of quality costs. The diagram has become rather cluttered but
the method of solution should now be obvious. As the shipper is in-
terested in all transport costs, we first sum the supply curve and the
quality cost curve vertically for each mode to obtain the unit trans-
c c
port cost curves, T 1 and T. Then, to find the competitive market so-
lution, we sum these transport cost curves horizontally to obtain a
"transport - supply curve" and find the point where this curve intersects
the transport demand curve. As Fig. 3.7 is constructed, this is at a
quantity of Q and transport costs of T. This yields a modal-split .
of Q 1 and Q 2 . Then, working back to the modal supply curves, we see
that the rate Charged by - Mode One 'will be Tr and that of Mode Two T.
1 2
In general these rates will not be equal. The conditions for a modal-
split are, again, that S t be rising and that its intersection with the
demand for transportation occur at a point where both modes are rep-
resented.
These simple diagrams have served nicely in illustrating the
development of our'analysis. However, when the full Model is . presented,
as in 'Fig. 3.7, the diagram becomes rather confused, even when dealing
only With linear curves. After a discussion of the measure and form
of our associated costs, we shall utilize mathematical methods in
discussing the model And tracing the effects of shifting the various
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