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Pricing in a Deregulated Environment: The Motor Carrier Experience

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  • John S. Ying
  • Theodore E. Keeler

Abstract

A major policy goal of the Motor Carrier Act of 1980 was to provide the shipping public with more efficient truck freight rates. Unlike previous studies, which have focused on intrastate reforms or highly aggregated data, this article analyzes dynamically the effects of the act on the freight rates of Class I and II common carriers of general freight. In addition to estimating rate equations, we have estimated cost functions to derive reliable measures of marginal cost. The specified rate equation also includes variables expected to affect the elasticity of demand. Simulations indicate that deregulation has reduced rates from the very beginning and that the effect has grown over time. By 1983, reductions are conservatively in the 15-20% range and in the 25-35% range by 1985.

Suggested Citation

  • John S. Ying & Theodore E. Keeler, 1991. "Pricing in a Deregulated Environment: The Motor Carrier Experience," RAND Journal of Economics, The RAND Corporation, vol. 22(2), pages 264-273, Summer.
    • Handle: RePEc:rje:randje:v:22:y:1991:i:summer:p:264-273
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    Cited by:

    1. Munechika Katayama, 2013. "Declining Effects of Oil Price Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(6), pages 977-1016, September.
    2. Benjamin Bridgman & Shi Qi & James Schmitz, 2006. "Does Regulation Reduce Productivity? Evidence From Regulation of the U.S. Beet-Sugar Manufacturing Industry During the Sugar Acts, 1934-74," 2006 Meeting Papers 438, Society for Economic Dynamics.
    3. Hernández, Carlos Eduardo & Cantillo-Cleves, Santiago, 2024. "A toolkit for setting and evaluating price floors," Journal of Public Economics, Elsevier, vol. 232(C).
    4. Behrens, Kristian & Carl Gaigne & Jacques-Francois Thisse, 2006. "Is the regulation of the transport sector always detrimental to consumers?," CIRJE F-Series CIRJE-F-455, CIRJE, Faculty of Economics, University of Tokyo.
    5. Kevin E. Henrickson & Wesley W. Wilson, 2008. "Compensation, Unionization, and Deregulation in the Motor Carrier Industry," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 153-177, February.
    6. Trick, Steven & Peoples, James, 2012. "Union compensation following intrastate deregulation: Evidence from the US trucking industry," Transport Policy, Elsevier, vol. 24(C), pages 10-18.
    7. Christian Brabänder & Maximilian Braun, 2020. "Bringing economies of integration into the costing of groupage freight," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 366-385, December.
    8. Abate, Megersa, 2014. "Does fuel price affect trucking industry’s network characteristics?: evidence from Denmark," Working papers in Transport Economics 2014:26, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    9. Wilson, Wesley W. & Wilson, William W., 2001. "Deregulation, rate incentives, and efficiency in the railroad market," Research in Transportation Economics, Elsevier, vol. 6(1), pages 1-24, January.
    10. Tammy L. Madsen & Gordon Walker, 2007. "Incumbent and Entrant Rivalry in a Deregulated Industry," Organization Science, INFORMS, vol. 18(4), pages 667-687, August.
    11. Gaynor, Martin & Anderson, Gerard F., 1995. "Uncertain demand, the structure of hospital costs, and the cost of empty hospital beds," Journal of Health Economics, Elsevier, vol. 14(3), pages 291-317, August.
    12. Wong, Lawrence, 2001. "Measuring technological change in the U.S. motor carrier industry," Research in Transportation Economics, Elsevier, vol. 6(1), pages 25-54, January.
    13. Tammy L. Madsen & Gordon Walker, 2017. "Competitive heterogeneity, cohorts, and persistent advantage," Strategic Management Journal, Wiley Blackwell, vol. 38(2), pages 184-202, February.

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