SPECIFIC VS GENERIC GOODS:IMPLICATIONS FOR TRANSPORT DEMAND ANALYSIS

Abstract

In this paper, we investigate the theoretical and empirical relevance of the distinction between generic goods and specific goods for the understanding of freight transportation demand. Specific goods are made for a single customer while generic goods are produced irrespective of which final customer will buy them. Theoretically, the distinction lays on a different relationship with time, based, for specific goods, on the trade-off between transport duration and cost and, for generic goods, on optimal stock. We claim that the distinction might affect shippers’ valuation of freight transport attributes such as value of time, value of transport time reliability and value of the risk of loss and damages. Since neither the sign nor the size of the effect can be established on pure theoretical grounds, an empirical analysis is carried out to test whether shippers value freight service attributes differently for the two types of goods. It is found that the value of transport time is significantly larger for generic than for specific goods.