Deregulation of the motor carrier industry: a Canadian example

Abstract. Recent changes in the economic regulation of the for-hire trucking industry in Ontario (Truck Transportation Act, 1988) have provided a new opportunity to investigate the associated impacts of deregulation or regulatory reform. Two main areas of concern are the overall charge rate levels for trucking service and the charge rate levels for shipments involving small remote communities. To investigate these areas of concern, the makeup of shipment revenues before and after the initiation of regulatory reform is analyzed. Emphasis is placed on the variation in intraregional shipment charge rates with respect to commodity type as well as the size and remoteness of the communities involved. The results of the multivariate analysis indicate that the overall charge rate levels have not declined in the majority of industry sectors examined. With respect to charge rate levels for small communities, the basic question concerns the existence of cross-subsidization. This can occur when carriers, 'obliged ' to serve remote communities under regulation, subsidize shipments to such areas from revenues earned in busier markets. The analysis of data in this paper provides evidence that cross-subsidization was present in some sectors of the industry but not in others