Estimation of Modal Demand Elasticities in Grain Transportation

Recent legislation in the transportation industry has stimulated a move toward more flex-ibility in railroad pricing and has consequently provided the impetus for the analysis of trans-portation demand. Modal demands for grain transportation are analyzed in this paper using a derived demand approach assuming dual relationships between production and cost functions of shippers ' distribution activities. Hypotheses were introduced in the empirical specification about the effects of rail car shortages and the introduction of multiple-car rail rates. The model was estimated and hypotheses tested in the case of eastbound wheat and barley shipments from North Dakota. Regulation of railroad rates by the In-terstate Commerce Commission has tra-ditionally been an important public policy affecting the grain transportation indus-try. However, recent legislation has en-couraged a trend toward less regulation over railroad rates. Although regulation of railroad pricing has only been partially re-laxed, the thrust of both the Railroad Re