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

George P. Baker and Thomas N. Hubbard

No 8727, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Explaining patterns of asset ownership in the economy 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 (Grossman and Hart (1986)) and of job design and measurement issues (Holmstrom and Milgrom (1994)).

JEL-codes: D23 L22 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-mic and nep-tid
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Published as Baker, George P. and Thomas N. Hubbard. "Make Versus Buy In Trucking: Asset Ownership, Job Design, And Information," American Economic Review, 2003, v93(3,Jun), 551-572.

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