The Regulation of Surface Freight Transportation: The Welfare Effects Revisited

This paper reexamines a topic that has been much studied by economists—estimating the effects on resource allocation of the economic regulation of surface freight transport. It demonstrates that in several studies the methods used to estimate the welfare costs of rate regulation are invalid, develops a correct procedure, and provides estimates of the welfare effects using data and estimates of modal market share relationships from a study by Boyer. The paper also analyzes some implications of an important assumption that is common among studies of the transportation sector. The assumption is that the total quantity of freight shipments by all modes is invariant with respect to tariff levels