Abstract
This paper aims to analyze theoretically the value of business travel time saving (business VTTS) and to derive the wage rate plus approach and Hensher's formula from the models. First, the past research on the business VTTS is reviewed including cost saving approach and Hensher approach. Ten models are formulated based on three cases: the utility maximization of business traveler from an employee's viewpoint, the profit maximization of the firm from an employer's viewpoint, and the group utility maximization from thecombined viewpoints of the employer and the employee. The results show that the wage rate plus approach is justified only in the employee's utility maximization for the business travel that is made within work hours under the time off in lieu. Then, the Hensher approach is theoretically derived from the group utility maximization approach with additional assumptions. Finally the implications of the results are discussed.
