would have less elastic demands for transportation than their
counterparts with lower valued commodities. Therefore, PQ may
be employed as a crude proxy for ET in facilitating price dis-
crimination schemes.

 There are two major nondiscriminatory explanations of
value-of-service pricing. The first is that with different
cargo values, carriers incur different insurance costs. Car-
riers are liable for the goods they transport.2 The more valu-
able the cargo, the greater the liability. Therefore, it would
not be surprising to observe rate differentials commensurate
with increased insurance costs.

 The insurance or liability argument is similar, in many
 respects, to DeVany and Saving's expedited service argument
 which will be discussed below. Both arguments are based on the
 premise that the qualities or types of transportation services
 for high and low valued goods are different, and that it is
 these differences which are reflected in the price. However,
 unlike prompt, expedited service, it is a fairly straight-
 forward matter to measure costs resulting from damage claims
 and insurance. In a recent study of general freight motor
 carriers, Fauth develops such measures (Tables 1 and 2). Both
 gross claims paid, and net claims and insurance costs are con-
 sistently under two percent of operating revenue. Fauth,
 therefore, concludes:


 Statistics on loss and damage claims paid by carri-
 ers indicate that such costs represent a very small
 part of total freight charges and do not justify
 commodity value as a major dimension of the rate
 structure (p. 69).


 In 1977 DeVany and Saving offered an alternative explana-
 tion of value-of-service pricing. They argued that shipper/
 receivers of urgently needed cargoes are more willing to pay
 for prompt, readily available service than are those shipping
 less urgent cargoes. For nonperishable goods the value of the