The Incidence of Regulatory Rents in the Motor Carrier Industry

Nancy Rose

RAND Journal of Economics, 1985, vol. 16, issue 3, 299-318

Abstract: This article focuses on two questions in the debate over motor carrier regulation. First, did regulation create, eliminate, or have no effect on monopoly rents in the trucking industry? Second, if there were rents, what was their incidence: were they received by owners of trucking firms, dissipated through higher costs, or captured by the Teamsters Union? Data on share price responses to deregulaton announcements reveal declines in expected profits of 8-19% of total firm value. This suggests that regulation created monopoly profits, and indicates that at least some of these rents accrued to owners of trucking firms. Firms' responses to regulatory change are modelled as functions of company's operating characteristics: and measures of unionization, operating efficiency, and service characteristics are shown to affect the impact of deregulation on share values.

Date: 1985
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