Deregulation, technological change and inefficiency in the U.S. Motor Carrier Industry Public Deposited

http://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/k930c0860

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  • This thesis presents two models to determine technological change and cost inefficiency in the regulated U.S. Motor Carrier Industry following regulatory reform. Data from the LTL sector of the industry from 1976 to 1987 are used in this study. Results provide insights about the observed increase in industry concentration and the effects of regulatory reform. In chapter II, a translog cost function model is used to examine the impact of deregulation and technological bias. We show that technological change has been labor saving and purchased capital using, and that these input biases were induced by changes in output level. The increase of capital cost share and the decrease of fuel cost share are attributed to deregulation. Overtime, the LTL sector of the motor carrier industry has become more capital intensive resulting in even higher entry barriers. Deregulation has had a negative impact on technological change and led to higher industry costs. In chapter III, a stochastic cost frontier model is used to examine cost inefficiency. Results suggest that cost inefficiency accounts for 12.61% of the industry's total cost and the average level of inefficiency has not significantly changed over time. The mean estimates of firm-specific inefficiencies range between 5.5% and 29.6% for the period 1976-1987. Based on the estimated firm-specific inefficiencies, Tobit regression models are constructed to examine variations of inefficiency among firms in different ICC regions and to identify factors contributing to overall inefficiency. The main factors contributing to inefficiency are output, percent of LTL shipments, and input ratios; in particular, large firms appears to operate more efficiently than small firms. We also show that, although large firms have a slower rate of technological advancement than small firms, economies of scale exist and are increasing over time. Therefore, the rise in industry concentration could be justified from the standpoint of scale economies and efficiency gain. Finally, deregulation has had no impact on the overall level of inefficiency.
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