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The Incidence of Regulatory Rents in the Motor Carrier Industry

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  • Nancy L. Rose

Abstract

This article focuses on two questions in the debate over motor carrier regulation. First, did regulation create, eliminate, or have no effect on monopoly rents in the trucking industry? Second, if there were rents, what was their incidence: were they received by owners of trucking firms, dissipated through higher costs, or captured by the Teamsters Union? Data on share price responses to deregulaton announcements reveal declines in expected profits of 8-19% of total firm value. This suggests that regulation created monopoly profits, and indicates that at least some of these rents accrued to owners of trucking firms. Firms' responses to regulatory change are modelled as functions of company's operating characteristics: and measures of unionization, operating efficiency, and service characteristics are shown to affect the impact of deregulation on share values.

Suggested Citation

  • Nancy L. Rose, 1985. "The Incidence of Regulatory Rents in the Motor Carrier Industry," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 299-318, Autumn.
  • Handle: RePEc:rje:randje:v:16:y:1985:i:autumn:p:299-318
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    Cited by:

    1. Grossman, Gene M & Levinsohn, James A, 1989. "Import Competition and the Stock Market Return to Capital," American Economic Review, American Economic Association, vol. 79(5), pages 1065-1087, December.
    2. Marín Uribe, Pedro Luis & Sicotte, Richard, 2003. "Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy," CEPR Discussion Papers 4093, C.E.P.R. Discussion Papers.
    3. Stefanie Ann Lenway & Douglas A. Schuler, 1991. "The Determinants of Corporate Political Involvement in Trade Protection: The Case of the Steel Industry," NBER Chapters,in: Empirical Studies of Commercial Policy, pages 75-112 National Bureau of Economic Research, Inc.
    4. Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    5. Peter Blair Henry, 2002. "Is Disinflation Good for the Stock Market?," Journal of Finance, American Finance Association, vol. 57(4), pages 1617-1648, August.
    6. Behrens, Kristian & Carl Gaigne & Jacques-Francois Thisse, 2006. "Is the regulation of the transport sector always detrimental to consumers?," CIRJE F-Series CIRJE-F-455, CIRJE, Faculty of Economics, University of Tokyo.
    7. Kevin E. Henrickson & Wesley W. Wilson, 2008. "Compensation, Unionization, and Deregulation in the Motor Carrier Industry," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 153-177, February.
    8. Burks, Stephen V. & Monaco, Kristen & Myers-Kuykindall, Josephine, . "Industry Issue Paper: Trends in the Use of Large Trucks by Truckload and Less-Than-Truckload Motor Carriers in the 1990s," Journal of the Transportation Research Forum, Transportation Research Forum.
    9. Luigi Zingales, 1998. "Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry," Journal of Finance, American Finance Association, vol. 53(3), pages 905-938, June.
    10. Mitchell, Mark L. & Mulherin, J. Harold, 1996. "The impact of industry shocks on takeover and restructuring activity," Journal of Financial Economics, Elsevier, vol. 41(2), pages 193-229, June.
    11. Henry S. Farber, 1987. "The Decline of Unionization in the United States: What can Be Learned from Recent Experience?," NBER Working Papers 2267, National Bureau of Economic Research, Inc.
    12. Henry, Peter B., 2000. "Is Disinflation Good for Growth?," Research Papers 1657, Stanford University, Graduate School of Business.
    13. John Wagster & James Kolari & Kerry Cooper, 1996. "Market Reaction To National Discretion In Implementing The Basle Accord," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 19(3), pages 339-357, September.
    14. John M. Abowd & Henry S. Farber, 1990. "Product Market Competition, Union Organizing Activity, and Employer Resistence," NBER Working Papers 3353, National Bureau of Economic Research, Inc.
    15. David Card, 1989. "Deregulation and Labor Earnings in the Airline Industry," Working Papers 627, Princeton University, Department of Economics, Industrial Relations Section..
    16. Bittlingmayer, George & Hazlett, Thomas W., 2000. "DOS Kapital: Has antitrust action against Microsoft created value in the computer industry?," Journal of Financial Economics, Elsevier, vol. 55(3), pages 329-359, March.
    17. Marín Uribe, Pedro Luis, 2001. "Exclusive Contracts and Market Power: Evidence from Ocean Shipping," CEPR Discussion Papers 2828, C.E.P.R. Discussion Papers.
    18. Tawil, Natalie, 1999. "Flow Control and Rent Capture in Solid Waste Management," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 183-201, March.
    19. McCarthy, Patrick S, 1995. "The 1982 Surface Transportation Assistance Act (STAA): Implications of relaxed truck weight and size limits for highway safety," Transport Policy, Elsevier, vol. 2(2), pages 107-117, April.
    20. Severin Borenstein & Nancy L. Rose, 2014. "How Airline Markets Work…or Do They? Regulatory Reform in the Airline Industry," NBER Chapters,in: Economic Regulation and Its Reform: What Have We Learned?, pages 63-135 National Bureau of Economic Research, Inc.
    21. repec:bin:bpeajo:v:21:y:1990:i:1990-3:p:287-335 is not listed on IDEAS
    22. Severin Borenstein & Nancy L. Rose, 2007. "How Airline Markets Work...Or Do They? Regulatory Reform in the Airline Industry," NBER Working Papers 13452, National Bureau of Economic Research, Inc.
    23. Stango, Victor, 2003. "Strategic Responses to Regulatory Threat in the Credit Card Market," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 427-452, October.
    24. Arora, Seema, 2000. "Green and Competitive? Evidence from the Stock Market," Research Papers 1650, Stanford University, Graduate School of Business.

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