ABSTRACT
The simple concept of derived demand allows to make several general statements with respect to the price elasticity of demand for transport. A simple example of derived demand is the demand for transportation of small cars from Europe to Canada, derived from the demand in Canada for small imported cars. The demand for transport is also a complement to the demand for the final good, which is the car. The cost of transportation-in a broad sense, time and money-imposes a limit on the extent to which a distant area can be linked to a given center. Transportation costs act as a barrier to trade both domestically and internationally. The modes of transport can be divided into three groups: land, air, and water carriers. Technological progress in transport together with closer and expanded economic transactions between countries, puts increasingly stronger demands on the transport system, and, hence, increases the need for coordination.
