FLEXIBLE FUNCTIONAL FORMS AND REGULARITY : ASSESSING THE COMPETITIVE RELATIONSHIP BETWEEN TRUCK AND RAIL TRANSPORTATION

This paper illustrates the extent to which alternative specifications of the cost function for a three-input transportation model are capable of satisfying regularity conditions required by economic theory. For the data set at hand, the CES-translog dominates the translog and Barnett translog specifications. However, application of the transformation suggested by William A. Barnett (1983) dramatically improves both translog models' performances. The Barnett translog exhibits the best ability to satisfy the regularity conditions. The estimated substitution and demand elasticities indicate vigorous intermodal competition in the transportation of fresh fruits and vegetables and lend support to continued deregulation of the transportation industry. Copyright 1990 by MIT Press.

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