Productivity performance of U.S. trucking in the era of deregulation

This paper analyzes the impact on the productivity of the U. S. interstate trucking industry of changes in the regulatory climate in 1980. Two methods of analysis are used; Total Factor Productivity (TFP) and Neo-Classical Cost Function analysis. The industry's performance in 1978 is compared to the performance in 1982. Results of the Total Factor Productivity analysis indicate the TFP of the industry in 1982, after deregulation, was lower than that of 1978. However drawing conclusions from this result would be unfounded. TFP analysis assumes constant returns to scale. Cost Function analyses find that the U. S. trucking industry exhibits significant economies of scale. As the trucking industry does not have constant returns to scale, TFP cannot be used to draw conclusions about its economic performance. The results of the Cost Function analyses are dependent on which model is chosen. The variable measuring the effect of deregulation is either positive or negative depending on exactly what other variables are included in the model. In none of the initial models is this variable found to be significantly different from zero. After deleting six data points which produce extreme residuals and correspond to questionable observations, this variable is found to be positive and significant, indicating increased costs in 1982.Business, Sauder School ofGraduat