Economics of intrastate trucking regulation: Some empirical evidence

There is a widespread misconception that the Motor Carrier Act of 1980 thoroughly deregulated the U.S. trucking industry. Actually, the Act only partially reduced the federal regulation of interstate trucking operations. At the state level, the Act left the decision to deregulate intrastate trucking to state regulators who could decide (a) whether there should be any intrastate deregulation, and (b) the institutional arrangements under which such deregulation would take place. While several states subsequently adopted deregulation, most states continue to regulate either the trucking rates charged by intrastate motor carriers, the entry of new carriers, or both. One purpose of this paper is to identify the factors that influence the regulators' net political returns from regulating the trucking industry and the probability of a state regulating the trucking industry. In addition, we investigate empirically whether such regulation has influenced the rates charged for intrastate trucking services. Our results suggest that variables reflecting the relative strengths of special interest groups explain the fact that some states choose to deregulate intrastate trucking while others do not. Special interest groups exerting influence on regulation of intrastate trucking are: (1) providers of railroad services, (2) providers of sea transportation, (3) regulators, (4) and farmers. This paper yields some empirical evidence showing that as special interest groups gain or lose strength over time and/or across states it affects states' decisions to adopt or unadopt policies.