A MODEL OF SPATIAL MARKET AREAS AND TRANSPORTATION DEMAND

In this paper, the authors derive a model of transportation demand and the interrelated supply decisions of agricultural shippers over a geographic space. These shippers use prices to both procure grain and to make output, mode, and market decisions. These decisions are each affected by the characteristics of the region and the level of spatial competition between the shipper and its rivals. The authors integrate each of these factors into their model of derived demand and spatial competition. The model is applied to data representing barge elevators on the Upper Mississippi and Illinois Rivers to estimate transportation demands and gathering areas. The results provide demand elasticity estimates for annual volumes between -1.3 to -1.9, estimates which are sizably larger than previous estimates of similar traffic. The results also indicate that inbound transportation rates to the barge shipper has a significant influence on annual volumes as does the distance to the nearest competitor. A second model, explaining the size of the market area of elevators is also estimated. The authors find that the rates of alternative modes that compete for barge traffic have a strong influence on market areas as does the distance to the nearest competitor. The results provide for a strong argument that transportation demands are elastic and that spatial market areas vary substantially with transportation rates.

Language

  • English

Media Info

  • Features: Figures; Tables;
  • Pagination: 17 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00988062
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Mar 14 2005 12:00AM