Under these conditions:


 (1%AQD Q T
 D %= APQ %A(PFB + PT)


where: ED = own price elasticity of demand for Q


 %A = percentage change


Holding PFOB constant, ED may be rewritten as:

 %AQT
 (2) ED p
 PT %AP
 P T


Rearranging the terms in (2) yields


 PT %&QT
 (3) E
 (3) ED = = ET
 Q T

where ET = elasticity of demand for transportation.

Relaxing the assumption that E = i, it can be shown that:

 P
 (4) ET= R ED


where: R = 1 if ES = and


 0 < R < 1 if ES < (see Appendix 1).


 The important point regarding the above is that, ceteris
paribus, ET is absolutely smaller, the smaller is PT/PQ. Given
PT and reasonably small variations in ED's across commodities
or no strong negative relationship between PQ and ED across
commodities, shipper/receivers of higher valued commodities