The Case for Diversification

In many cases in the transport sector of the economy, diversification—that is, horizontal integration—is proscribed explicitly by law and/or by the policies of the quasi-judicial bodies which regulate transportation in the United States. This state of affairs serves the best interest neither of those engaged in producing transportation nor of the nation as a whole. The transport entrepreneur is discouraged from striving for a both timeless and prosperous life for his enterprise, and the production of transportation over-all is carried out with less than maximum efficiency. In view of transport's key role in the functioning and development of the American economy, nothing can be tolerated which thwarts employment in an optimum manner of the resources devoted to transportation. Vigorous competition in the long run gives best assurance that least-cost methods of performing a given transportation task will be used. The competition that needs to exist is that between the modes as well as that between carriers within a given mode. Competing business organizations in the transport field, integrated both horizontally and vertically, constitute the best means of assuring the necessary intramodal competition. Their existence would also minimize the necessity for the application of external regulatory forces to accomplish reasonably satisfactory resource allocation in the transport sector of the economy.