## MODEL OF INTERACTIONS BETWEEN TELECOMMUNICATIONS AND TRANSPORT

Exhibits 2-7 through 2-9 are a series of three graphics that illustrate the interaction effects between transportation and telecommunications. Each graphic in the series is a mathematical construction of arbitrary numbers and plausible economic effects unrelated to any empirical data. They are intended to illustrate generic structural relationships. These graphics are derived from a similar one shown by Salomon (1986).

Exhibit 2-7 illustrates the growth of telecommunications and transportation volumes with part of the telecommunications volume causing a trip reduction or substitution effect. Conventional wisdom and intuition yield this picture of how telecommunications and transportation interact with each other. In this model, transportation volumes are lower than they would have been if telecommunications were less used, because of the substitution effect. Note that both telecommunications and transportation are growing.

Exhibit 2-8 is just like Exhibit 2-7, with the addition of a trip-stimulation effect caused by telecommunications. The notion illustrated is that telecommunications may stimulate new trips, for a variety of reasons described in this report. In this exhibit, the trips that telecommunications stimulates are outnumbered by the trips that telecommunications replaces, so the effect of telecommunications is still one of net substitution. In this model, again, transportation volumes are lower than they would have been if telecommunications were less used, because the trip substitution effect outweighs the trip stimulation effect.

But what if trip stimulation by telecommunications were a stronger effect than trip substitution? This is the case illustrated by Exhibit 2-9. It is the same as Exhibit 2-8, except that trip stimulation is shown as having a greater effect than trip substitution, and the net effect of telecommunications on transportation is one of trip stimulation.

The key issue is the size of the substitution effect compared to the size of the stimulation effect. If substitution is greater than stimulation, then there is net substitution. If the reverse is true, then there is net stimulation of travel by telecommunications. Salomon (1985) suggests that the reality of the interaction between the two modes is simultaneous substitution and stimulation, the sum of both effects being net stimulation.

The underlying complexity in determining the interplay of substitution and stimulation is shown in the following example:

A person may have several dozen electronic interactions with her bank every month through cash machines and electronic point-of-sale terminals. These same electronic transactions do not, however, replace several dozen trips to the bank, since she may have formerly made only one trip to the bank per pay period. Furthermore, her bank may well have been easily reachable on the drive home from work and thus may not have been a mileage generator. Going further, the most significant impact of the new electronic world she lives in may be the personal time savings from not waiting in line to deposit her check.

Then we must ask, "How are the time savings now used? Is there any new trip-making impact from more ready access to cash and electronic transactions?" Perhaps she is making more frequent trips to the ATM for smaller withdrawals of only the cash she needs and enjoying greater security in carrying smaller amounts of cash.

This study effort did not have access to the necessary data or to the analytical tools that would let the balance of travel substitution and stimulation be quantified. The present analysis does, however, provide enough data to show that telecommunications stimulation of travel is probably a strong counterweight to travel substitution, even though we are not able to prove how strong.

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