THE WELFARE GAIN FROM TRUCKING DEREGULATION: TRANSBORDER TRUCKING AND CABOTAGE

This paper deals with how to model the effect of cabotage in transborder trucking markets. It will argue that: 1) deregulation in general represents a net welfare gain to a society as narrowly composed of shippers and trucking firms; and 2) the current cabotage regulations, in place in Canada and the United States, are a non-tariff trade barrier that, even in the current deregulatory environment on both sides of the border, can lead to a further gain in societal welfare if they were removed either unilaterally or under a reciprocity agreement. In other words, cabotage reform is a positive sum game for North American transborder trucking markets.