1. TRANSPORTATION DEMAND ANALYSIS
DEMAND THEORY

2. Chapter 2: DEMAND THEORY
Consumer Demand
Chapter 2: DEMAND THEORY

3. Chapter 2: DEMAND THEORY
Example:
Agricultural center
Industrial center A B
No food
First :mule track case
Transportation with difficulty
Loss & deterioration during journey
A bit high price
A few people can afford as merchant or customers
3 scenarios:
Chapter 2: DEMAND THEORY

4. Chapter 2: DEMAND THEORY
Example:
Agricultural center
Industrial center A B
No food
Second :trail established
Transportation with horse-drawn carriages
Travel time cut in half
Reducing selling price in B
Amount of traffic & customers increase
Chapter 2: DEMAND THEORY

5. Chapter 2: DEMAND THEORY
Example:
Agricultural center
Industrial center A B
No food
Third :primitive road
Transportation with small trucks
Transportation of larger quantities
Lower costs & selling price at B
Amount of traffic & customers again increase
Chapter 2: DEMAND THEORY

6. Reduction selling price Chapter 2: DEMAND THEORY
Example:
Increasing traffic
system improving
selling amount at B
Reduction selling price
Chapter 2: DEMAND THEORY

7. Chapter 2: DEMAND THEORY
Example:
Conclusion:
One demand condition but many traffic conditions.
“Demand for transportation depends on type of transportation system” is wrong and demonstrates the danger of confusing traffic flow with demand.
Chapter 2: DEMAND THEORY

8. Demand & Traffic, differences
Definition: Demand for transportation as potential for traffic flow
cost
Chapter 2: DEMAND THEORY

9. Chapter 2: DEMAND THEORY
Demand & Traffic, differences
Generalized cost:
Actual cost of transportation.
Value of time.
Deterioration of commodities.
Discomfort.
Inconvenience of journey.
Generalized cost
Chapter 2: DEMAND THEORY

10. Demand vs. Traffic volume Chapter 2: DEMAND THEORY
Generalized cost ≡ resistance R
Demand ≡ potential V
- + Ω
Chapter 2: DEMAND THEORY
Actual amount of traffic ≡current I
V=IR

11. Transportation Demand
Volume is affected by:
Condition of the road
Transportation cost
&
Market for foodstuffs in B
Transportation demand is a derived demand
Chapter 2: DEMAND THEORY

12. Transportation Demand Chapter 2: DEMAND THEORY
Relationship between the amount transported V and the cost of transportation CAB ?
Chapter 2: DEMAND THEORY

13. Transportation Demand
PB=PA+CAB
PA (constant)
QB=Q(PB)
Chapter 2: DEMAND THEORY
Price at B = price at A + transportation cost
QB=DB(PB)=DB (PA+CAB)=V(CAB)

14. Transportation Demand Chapter 2: DEMAND THEORY
VAB=demand for transportation
Chapter 2: DEMAND THEORY
QB=DB(PB)=DB (PA+CAB)
=V(CAB)

15. Microeconomic Demand Theory
Individual level:
Consumer demand
Individual traveler behavior
Part I Urban Networks and Equilibrium
1.2 NETWORK REPRESENTATION
levels
Aggregate level:
Market demand
Behavior of total system
Summing individuals

16. Consumer Demand Theory Chapter 2: DEMAND THEORY
individual or household, independently making decisions about the amounts of various commodities available during a specific period of time.
In consumer demand theory understanding and characterizing the factors that affect consumption behavior is interested.
Chapter 2: DEMAND THEORY

17. Chapter 2: DEMAND THEORY
Five basic assumptions in consumer demand theory:
1-consumer has a choice.
consumer can vary the amount of the various commodities consumed and can vary the amount of money out of the total budget.
Chapter 2: DEMAND THEORY

18. Chapter 2: DEMAND THEORY
Basic assumptions
2-every consumption give utility or satisfaction to the consumer.
These utilities are different for different consumers.
Chapter 2: DEMAND THEORY

19. Chapter 2: DEMAND THEORY
Basic assumptions
3-the consumer has a consistent
preference structure based on the relative utilities.
For example :X,Y,Z
Preference of x over y and y over
Z directly implies the preference of x over z
Chapter 2: DEMAND THEORY

20. Chapter 2: DEMAND THEORY
Basic assumptions
Goods Classification:
Competitive goods
where a choice truly exists between consumption alternatives.
Choice between automobile trip & bus trip
Complementary goods
Air trip & airport access trip
Chapter 2: DEMAND THEORY

21. Chapter 2: DEMAND THEORY
Basic assumptions
4-the consumer is assumed to be insatiable .
Given the choice between two quantities of the same goods consumer opt larger.
Chapter 2: DEMAND THEORY

22. Chapter 2: DEMAND THEORY
Basic assumptions
5-the choice of the consumer is limited by a budget constraint.
Not unlimited supply nor unlimited choice.
Consumer will choose a combination of goods that maximize the utility in presence of budgetary constraints.
Chapter 2: DEMAND THEORY

23. Chapter 2: DEMAND THEORY
Basic assumptions
6-The consumer has full information about the goods.
Chapter 2: DEMAND THEORY