The Inefficiency of Regulating a Competitive Industry: Productivity Gains in Trucking Following Reform

This study confirms the higher productivity levels predicted by advocates of regulatory reform in trucking and shows that these gains have been substantial. Cost simulations suggest that, following a year of higher expenditures, efforts to remain competitive have yielded considerable cost savings that increase over time, from 1 percent in 1981 to 23 percent in 1984. The indirect effects of reform through the independent variables initially decrease costs, but later lead to higher costs. The cumulative effect has been a less than 1 percent increase in costs in 1980, becoming by 1984, a significant 16 percent productivity gain. Copyright 1990 by MIT Press.