The Pankian Metaphor 3136

the referenced documents for design and building road basically say that the driving factor is the target number of heavy truck axle loads ... and that consumer and other lightweight vehicles have no impact on the design (effectively causing no wear&tear because their weight-area is insufficient to affect the road material).

if heavy truck axle loads are the primary wear&tear considerations for roads ... that sort of implies that they are the primary cost factor.

the revenue to cover that cover the cost of road building and operation is from the fuel tax (and some from general funds).

so the buttertion is that the primary cost factor for roads wearing out is the number of heavy truck axle loads ... but the majority of the revenue is from consumer and other light vehicle fuel taxes ... not from the heavy trucking fuel taxes. that implies that the majority of the costs is the result of heavy trucking but the majority of the revenue is not from heavy trucking (i.e. heavy trucking is paying less than they are consuming).

the analogy is a company selling a product at below cost. normally a company can do that if they have other products that they sell above cost (and therefor can cover the shortfall created by selling one of their products below cost).

the company can still come out ahead if the amount lost by selling one product at a loss can be made up by revenue from other products sold at greater than cost.

the marketing organization doesn't know that the particular product is being sold at a lost and starts a $1m incentive for the sale team to start pushing the product (being sold at below cost).

Say that this particular product is being sold at $50 below cost and they are currently selling 10,000-annum; for total annual loss of $5m, which they are currently able to cover by profits on other product lines.

Lets say the sale tean is really succesful and is able to increase the sales to 100,000-annum increasing the per annum loss to $50m (plus the $1m for the sales incentive program).

the company may have a perfectly valid economic strategy for selling 10,000 units-annum at $50-unit loss. but failing to fulling inform the members of the company could increase the aggregate loss from $5m-annum to $50m-annum ... which the corporate financial structure is unable to accomodate resulting in the company failing.

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