Transportation Services and Innovation in the Housing Industry: A Study of the Relations between Transportation and Production

Innovations improve the organization of production and provide new products and services. While it is accepted that economies are stimulated by innovations, the role of transportation improvement in stimulating innovation has not been sufficiently examined. This role is examined in this study. A methodology for examination of the contribution of transportation improvements to production is presented. Residential housing construction is chosen as the sector of production for study. This sector is large and important, is generally considered to be experiencing reduced or negative productivity growth, and is transportation intensive. This thesis begins with an analysis of conventional productivity studies. These studies fall short in their attempts to explain productivity changes. An examination of the long history of housing construction reveals that productivity changes have resulted from the adoption of innovations, innovations enabled by improvements in transportation. Following a discussion of innovation theory, a list of housing innovations and typology for their classification is presented. From the list, drywall construction is chosen as for case study. To provide a temporal frame for the analysis of housing technology, provide time series data on growth and change, and explore simple relationships, trends in transportation and housing productivity are presented and examined. These data characterize transportation systems as mature and productivity in housing as stagnating. Investigation of the specific relations between transportation improvement and housing productivity change is the subject of the last section of the thesis. The savings enabled by the adoption of the drywall construction innovation are estimated. The calculation of savings is based on estimates of innovation adoption rates and saturation levels assuming the truck-highway system had not been deployed. Using this approach, the benefit of truck highways through this single innovation is found to be on the order of fourteen percent of truck related road costs.