Forcing a carrier to price a captive shipper at marginal cost will not enhance efficiency.
Topic: 2.1 truck
The paper argues that output characteristics are positively correlated with, and influenced by, firm size. When firm size increases, output characteristics also change in a direction that reduces unit costs. Drawing on evidence from the US trucking industry, an appropriate specification indicates that economies of scale may well exist.
High concentration in the less-than-truckload motor carrier industry is examined from the perspective of the differentiated product theory. Under the condition that cost increases of high service quality are within the limits that shippers are willing to pay, only a small number of competing carriers can co-exist.
An approach to estimating differential inter-zonal marginal costs for a transport system is illustrated using data of a Chilean trucking company. The results reveal important differences among marginal cost estimates over different origin-destination pairs.
Cost Differentials Among Household Goods Carriers: Network Effects, Operating Characteristics, and Shipment Composition
This paper examines the structure and costs of the household goods motor carrier industry which is characterised by both large van line systems and smaller independents. The results suggest that firms of varying sizes can operate efficiently and offer a wider range of services.
This paper quantifies the significant economies of scale present in a short haul truckload drayage market through the application of a minimum cost scheduling algorithm to actual shipments. This technique offers an alternative to econometric methods which have led to conflicting conclusions with regard to economies of scale in trucking.
Economies of Scale and Scope in the Motor Carrier Industry. An Analysis of the Cost Functions for Seventeen Large LTL Common Motor Carriers
The largest carriers are shown not to have a cost advantage in terms of overall returns, less than truckload specific returns, and economies of scope. Arguments of domination in the LTL segment by very few large firms based on their cost advantages are probably incorrect.
Deregulation has led to an influx of smaller carriers and also of brokers. Owner-operators whose trucks were previously hired by large carriers now operate independently and receive market information from the brokers. Average costs have fallen. Data from a regulated industry cannot be relied on for prediction of what will happen after deregulation.
This paper traces the various administrative and legislative steps in the reform of the motor carrier industry and their effects on the return to investors. The author concludes by asking whether the reduced return is an elimination of monopoly rents, or whether the previous earnings arose partly from the additional obligations placed on motor carriers.
Deregulation of the motor carrier industry has led to reduced charges and has not injured those shippers/receivers who were thought to need protection.