ABSTRACTRecent papers show a renewed interest in the analusis of trade‐offs and of substitution effects in freight transport between truck and rail modes in order to reduce air and noise pollution as well as oil consumption. The inter‐model substitution effects are of particularly interest in the Italian peninsula where geographical and geological factors create a natural impedance to the movement of goods between regions. In this paper, we analyze the current situation in Italy, evaluate the possibility of a consistent switch to the rail system and compute the relevant substitution and demand elasticities. Regions and productive sectors that benefit from an increased efficiency in transportation are identif