Regulation and Competition in the Motor Transportation Industry

Evidence exists today which indicates that our present motor carrier regulatory system, rather than protect the public interest , might actually inhibit the efficient provision of transportation services to the economy. Accepting such a view of the regulated motor transport market as valid, this thesis could serve as a model from which legislators might begin to re-write our motor carrier act. It is assumed throughout this work that such an undertaking is well overdue. The possible use of this thesis for such a purpose is its primary justification for existence. In order to serve as a basis for such a legislative revision, the model and recommendations contained herein should be designed to maximize the potential benefits which might accrue to the industry and the shipping public. The philosophical bias flowing throughout this work is the conviction that this maximization of benefits could best be realized through increased competition among firms, coupled with the minimization, through reduced regulation, of any economic threats to the stability of the national transportation system. Thus, the attempt is made in the model to be presented to provide for an increased level of industry competition while retaining those essential elements of regulation upon which the national transportation policy was originally based. The approach taken in this work is one of review, description, analysis, model-building and commentary. The current regulatory issues of concern to the motor transportation industry are reviewed in chapter 2. The market structure is described in chapter 3, followed by an analysis of price and output determination in chapter 4. The framework for a new approach to price determination in this industry is developed in chapters 5 and 6. The model presented is intended to replace many of the regulatory procedures in use today. Chapter 7 contains comments on the relevance to the industry of the model constructed in chapters 5 and 6, to include a discussion of its probable impact upon several of the most perplexing problems facing regulators today. The appendix was added to enhance the reader\u27 s und er-st.and.i.ng of the extent to which present-day regulated motor transport rate structures fail to represent rational and economically justifiable charges for services rendered. This thesis will not continue in the modern trend of regulatory literature--that is, resorting to emotionalism and allegations aimed at removing regulation from the transport industry (16). Nor is its purpose to justify the oontinued existence of the Interstate Commerce Commission. Rather, the admittedly ambitious goal of this work is to present what is felt to be a much-needed new format for regulation in this field--one based upon the ideals of economic theory, the tenets of national transportation policy, and the restraints of present-day market realities. With this goal in mind, every attempt will be made to announce assumptions, identify opinions and employ rigid economic analysis whenever possible