Dionysius lardner, an early transportation economist, referred to this phenomenon as the law of squares in transportation and trade (also known as Lardner's Law). As shown in figure 2-2, a producer at Point A can afford to transport a product 100 miles and meet competitive laid - down or landed costs. The boundary of the relevant market area is shown by the circumference of the smaller circle. If transportation cost is cut in half, the same sum will now transport the supplier goods for twice the distance, that is, 200 miles. Now the market boundary is shown by the circumference of the larger circle. The relevant market area increased four times in size when the radius doubled from 100 to 200 miles.
Time Utility The concept of time utility is closely aligned to that of place utility. The demand for a particular commodity ma exist only during certain periods of time. If a product arrives in a market at a time when there is no demand for it, then it possesses no value. For example, the demand for Halloween costumes exists during a specifictime of the year. After Halloween passes, these goods cannot be sold because they have suring that products are at the proper locations when needed. For example, raw materials for production, fruit, and Christmas toys all need to arrive at certain locations during specific times or their value will be diminished. The increased emphasis upon just-in-time and scheduled deliveries as well as lean inventories has heightened the importance of time utility, especially for high-value products and emergency shipments. Air freight shipments are particularly affected by the importance of time utility.
Lardner's Law can also be related to time utility. For example, the speed of transportation might be a governing factor for the transportation of certain perishable products that have a limited shelf life. Assume the small circle in Figure 2-2 represents the current market area based on a specific transportation speed. If the speed were doubled, the potential service area would quadruple.