Benefits of travel time savings for freight transportation : beyond the costs



European Regional Science Association ___________________________________________________ August, 2003

out what benefits are linked with production cost changes and what benefits are linked
with other effects. (ii) The second possibility is to measure the shifts in supply and
demand curves, that occur when transport time changes. This approach can be readily
simplified if we suppose that the supply curve is horizontal and is shifted downward
exactly from the time depending cost variation of transport operator. If such assumption
holds then we find ourselves in the same situation as (i), but with the extra simplifying
hypothesis that all non transport cost related benefits can be found in the demand curve
shift. In this case, one can think about using the usual tools of economic analysis, like
RP and SP, to measure the shift in demand curve. This gives rise to the use of shippers
interview data. One should however note that many shipper interviews address a mixed
population of shippers and own account transport. One should then (i) rely on samples
consisting only of shippers (like in Fowkes, Nash et Tweddle, (89); Wigan, et al (98)) or
(ii) exclude own account transport from the elaboration of shippers value of time
estimates (see for instance De Jong, Van De Vyvere, Inwood (95); De Jong, Gommers
and Bergkvist (96); Fridstrom and Madslein (94); Widlert and Bradley (92); Jiang (98),
or De Jong, Velay et Houée (99)). Eventually (iii) the third possibility would rely on the
decomposition of the surplus based on the agent that takes advantage of them : shipper
of hauliers. This solution seems to offer no advantage compared with the others and
requires the formulation of hypotheses on the elasticity of price to production cost
changes.

4.2 Willingness to pay of the hauliers for time saving : a
paradox ?

Eventually one should note that the measure of hauliers benefits raises some
paradoxes. If the supply curve is horizontal, hauliers should have no increase in surplus
when time savings occur. The paradox here is that SP or RP exercises elicit a
willingness to pay of the hauliers for time savings. It could be tempting to explain such
phenomenon by myopia of the operators. Transport operators could give answers to
interview in a short term context, where price may not be already adjusted to the change
in cost ; or operators could have a preference for risk, meaning that if production
conditions change this is an opportunity to increase market share, and this increase
could be reflected in a willingness to pay. These reasons cannot be completely rejected
but one can also consider that there is another cause for this paradox. Hauliers elicited

13



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