A STATISTICAL SKETCH OF INTERCITY FREIGHT DEMAND

ESTIMATES ARE MADE OF THE PARAMETERS OF THE RAIL AND TRUCK DEMAND FUNCTIONS PRODUCED IN INTERCITY FREIGHT DEMAND. REGRESSION ANALYSIS IS USED ON TIME SERIES FOR THE PERIOD 1947 THROUGH 1966 TO OBTAIN ESTIMATES OF THE INCOME ELASTICITY OF DEMAND, THE PRICE ELASTICITY OF DEMAND, AND THE CROSS-PRICE ELASTICITY OF DEMAND FOR EACH OF THE TWO MODES. THE DEPENDENT VARIABLE IN THE EQUATIONS IS THE VOLUME OF FREIGHT OFFERED FOR CARRIAGE BY SOME SECTOR OF THE ECONOMY TO EITHER OF THE TWO MODES, RAIL OR TRUCK. THE SHORT COMINGS ARE POINTED OUT OF THE TRUCK RATE INDEX RELATIVE TO THE INDEX OF RAIL RATES. DATA ARE ENTERED IN THE EQUATIONS IN LOGARITHMIC FORM. TWELVE MARKETS ARE STUDIED WITH FOURTEEN DEPENDENT VARIABLES USING TWO SETS OF EQUATIONS. FEE EXPLANATORY VARIABLES ARE ENTERED IN EVERY POSSIBLE COMBINATION. THE RESULTING DATA ARE PRESENTED IN TABLES. THE EQUATIONS FOR THE RAIL MARKET CONSISTENTLY INDICATE INELASTIC DEMAND. THE AGGREGATE DEMAND EQUATION FOR RAIL TRAFFIC SHOWS THAT GROWTH IN THE GNP IS GENERATING NEW RAIL TRAFFIC AT ONLY THREE-FIFTHS THE RATE THE ECONOMY IS EXPANDING. THE TRUCKING INDUSTRY IS ON AN EXPANSIONARY GROWTH PATH. TRUCK VOLUMES HAVE EXPANDED ABOUT 2-1/3 TIMES AS FAST AS GNP. RATE REDUCTIONS ARE RECOMMENDED TO IMPROVE RAIL PROFITS.