What is it about?
Traditionally, many freight mode choice studies accommodate taste variations in freight mode choice behaviour by segmenting data based on commodity type (i.e. exogenous segmentation). However, based on the use of model structures with random taste variations (i.e. Mixed Logit) or endogenous segmentation (i.e. Latent Class models), this paper evidently shows that a substantial amount of residual heterogeneity still remains within each commodity segment.
Why is it important?
Evidently, the conventional practice of using commodity type alone as a segmenting variable is an inadequate way to account for taste heterogeneity. Failure to account for such heterogeneity properly results in degraded model fit and biased model parameters, potentially leading to misinterpreted results and violated policy decisions.
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This page is a summary of: Taste heterogeneity and market segmentation in freight shippers’ mode choice behaviour, Transportation Research Part E Logistics and Transportation Review, March 2011, Elsevier, DOI: 10.1016/j.tre.2010.09.003.
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