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A Cross Sectional Study of Freight Transport Demand and Rail-Truck Competition in Canada

  • Tae Hoon Oum
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    This article derives a rail-truck freight demand model that is consistent with the economic theory of modal choice in the price-speed-reliability space. The translog model is estimated from the cross sectional data of Canadian interregional freight flows for the eight selected commodities. Major empirical findings are: (i) The quality attributes of service significantly influence modal choice only for the relatively high-value commodities. (ii) Both the price and quality elasticities of demand and the elasticity of rail-truck substitution vary substantially from route to route as well as from commodity to commodity. This implies that CES models including Cobb-Douglas form should not be used for freight demand studies. (iii) For the relatively high-value commodities, short-haul traffic is largely dominated by the truck mode, and significant rail-truck competition exists only in the medium and long-haul markets. (iv) For the relatively low-value commodities, effective rail-truck competition exists only in the short-haul markets. Hence, the medium and long-haul markets are largely rail-dominated.

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    Article provided by The RAND Corporation in its journal Bell Journal of Economics.

    Volume (Year): 10 (1979)
    Issue (Month): 2 (Autumn)
    Pages: 463-482

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    Handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:463-482
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