An Appraisal of the Economics of Scale in the Motor Carrier Industry

Abstract

problem under study here is of interest, because these authors hold that the trucking industry epitomizes the classical model of perfect competition. Here is an industry where there appears to be no substantial economies of scale, where the number of firms is large, and where, in the absence of restriction, entry would be brisk. In short, here is an industry where competition is structurally feasible and technologically possible. Perhaps the gradual erosion of competition by mergers is acceptable in industries where there is persuasive evidence that regulated monopoly can better serve the public interest. However, where, as here, such evidence is almost wholly absent, acquiescence in a relentless process of industrial concentration is without the necessary conceptual underpinnings. If giantism and oligopoly come to the trucking industry, this will not be the result of natural economic forces but of a benign tolerance, if not active promotion, by the Interstate Commerce Commission.3 Apart from some errors and questionable procedures contained in this report, the most interesting and substantive portions deal with the expressed philosophy of the authors vis-a-vis the trucking industry and the data supporting this view.4 The public policy conclusions which obviously follow this characterization of the economics of the trucking industry is one of complete deregulation. Dependence on anti-trust legislation and the courts and the licensing standards of the several states would then appear to be the sole permissible regulatory devices. Although the weaknesses of the statistical tables above described may justify the summary rejection of the policy conclusions resulting from their use, the analysis contained in the two basic research reports cited in the study must be treated with a greater degree of respect and authority. These two documents are the so-called Nelson Report5 and the Roberts Article. 6