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Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information

  • George P. Baker
  • Thomas N. Hubbard
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    Explaining patterns of asset ownership is a central goal of both organizational economics and industrial organization. We develop a model of asset ownership in trucking, which we test by examining how the adoption of different classes of on-board computers (OBCs) between 1987 and 1997 influenced whether shippers use their own trucks for hauls or contract with for-hire carriers. We find that OBCs' incentive-improving features pushed hauls toward private carriage, but their resource-allocation-improving features pushed them toward for-hire carriage. We conclude that ownership patterns in trucking reflect the importance of both incomplete contracts and of job design and measurement issues.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282803322156981
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    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 93 (2003)
    Issue (Month): 3 (June)
    Pages: 551-572

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    Handle: RePEc:aea:aecrev:v:93:y:2003:i:3:p:551-572
    Note: DOI: 10.1257/000282803322156981
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    1. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
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