Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information

George P. Baker and Thomas N. Hubbard

American Economic Review, 2003, vol. 93, issue 3, 551-572

Abstract: Explaining patterns of asset ownership is a central goal of both organizational economics and industrial organization. We develop a model of asset ownership in trucking, which we test by examining how the adoption of different classes of on-board computers (OBCs) between 1987 and 1997 influenced whether shippers use their own trucks for hauls or contract with for-hire carriers. We find that OBCs' incentive-improving features pushed hauls toward private carriage, but their resource-allocation-improving features pushed them toward for-hire carriage. We conclude that ownership patterns in trucking reflect the importance of both incomplete contracts and of job design and measurement issues.

Date: 2003
Note: DOI: 10.1257/000282803322156981
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Citations: View citations in EconPapers (176)

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