The Exchange Value Embedded In A Transport System

TL;DR

This paper demonstrates that well-designed transport systems inherently possess an exchange value that can enhance consumer welfare through goods exchange during transportation, without extra costs, and introduces a valuation method for this exchange value.

Contribution

It introduces an explicit valuation formula for the exchange value embedded in transport systems and analyzes conditions for its positivity and optimal transport considering exchange value.

Findings

Exchange value is always nonnegative and bounded.

Criteria for positive exchange value depend on transport structure, preferences, and prices.

A new optimal transport problem incorporating exchange value is studied.

Abstract

This paper shows that a well designed transport system has an embedded exchange value by serving as a market for potential exchange between consumers. Under suitable conditions, one can improve the welfare of consumers in the system simply by allowing some exchange of goods between consumers during transportation without incurring additional transportation costs. We propose an explicit valuation formula to measure this exchange value for a given compatible transport system. This value is always nonnegative and bounded from above. Criteria based on transport structures, preferences and prices are provided to determine the existence of a positive exchange value. Finally, we study a new optimal transport problem with an objective taking into account of both transportation cost and exchange value.