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

increasing cubic capacity (allowing cargo ton-miles to adjust optimally)
could be viewed as long run cost.
The barge type dummy variables really serve two purposes.. Its
major purpose is as an indicator of design or physical differences be-
tween barges. The second use of barge type could be as a discrete '
measure of barge capacity. However, there are variations in capacity
within any one barge type, with some overlapping of sizes. In addition,
the discrete nature of barge type does not lend itself to analysis in
a long-run cost framework. Thus, in order to obtain a more meaningful
cost-capacity relationship, the continuous cubic capacity measure has
been included in the model.
In summary, an observation for the barge cost study consists of
a barge (identified by type, age, and cubic capacity); the total number
of cargo ton-miles carried during each year by each barge; the percent
cargo ton-miles carried by eaCh barge of six commodity groups and the
total number of comModities carried; the percent cargo ton-miles carried
by each barge for twelve river districts; the annual expense for each
barge; and the year in which the observation was made.
The Statistical Model
A,statistical cost function for barges has been estimated using
the data described above. The form of the function is:
11 •
log
10
Cost/CTM = log,„ lu 0 a +a1log10 CTM + a l og S +aN+E B.R +
2 10
3 i=1 1 i
5 8 2
E o.C. +E 6,T, +Z Ay
j=1 J J k=1 K K L=1 L L
•
..
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