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Determinants of organizational form: Transaction costs and institutions in the European trucking industry

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Abstract

We explain why European trucking carriers are much smaller and rely more heavily on owner-operators (as opposed to employee drivers) than their US counterparts. Our analysis begins by ruling out differences in technology as the source of those disparities and confirms that standard hypotheses in organizational economics, which have been shown to explain the choice of organizational form in US industry, also apply in Europe. We then argue that the preference for subcontracting over vertical integration in Europe is the result of European institutions—particularly, labor regulation and tax laws—that increase the costs of vertical integration.

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  • Benito Arruñada & Manuel González & Alberto Fernández, 2004. "Determinants of organizational form: Transaction costs and institutions in the European trucking industry," Economics Working Papers 767, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:767
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    1. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
    2. Caballero, Ricardo J. & Hammour, Mohamad L., 1998. "Jobless growth: appropriability, factor substitution, and unemployment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 51-94, June.
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    11. Jack A. Nickerson & Brian S. Silverman, 2003. "Why aren't all Truck Drivers Owner-Operators? Asset Ownership and the Employment Relation in Interstate for-hire Trucking," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 91-118, March.
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    15. Bronars, Stephen G & Deere, Donald R, 1993. "Unionization, Incomplete Contracting, and Capital Investment," The Journal of Business, University of Chicago Press, vol. 66(1), pages 117-132, January.
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    Cited by:

    1. Marianne Fischman & Emeric Lendjel, 2010. "Comment expliquer la permanence de l'artisanat dans le transport fluvial de marchandises ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00582556, HAL.
    2. Josef Windsperger & Maria Jell, 2005. "Structuring residual income and decision rights under internal governance: results from the Hungarian trucking industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 295-305.
    3. Benito Arruñada & Luis Vázquez & Giorgio Zanarone, 2009. "Institutional constraints on organizations: the case of Spanish car dealerships," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 15-26.
    4. Marta Fernández-Olmos & Jorge Rosell-Martínez & Manuel A. Espitia-Escuer, 2009. "Vertical integration in the wine industry: a transaction costs analysis on the Rioja DOCa," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 231-250.
    5. repec:eee:proeco:v:194:y:2017:i:c:p:59-72 is not listed on IDEAS
    6. Francine Lafontaine & Laura Malaguzzi Valeri, 2009. "The deregulation of international trucking in the European Union: form and effect," Journal of Regulatory Economics, Springer, vol. 35(1), pages 19-44, February.
    7. Hu, Y. & Huang, Z. & Hendrikse, G.W.J. & Xu, X., 2005. "Organization and Strategy of Farmer Specialized Cooperatives in China," ERIM Report Series Research in Management ERS-2005-059-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    8. repec:hal:journl:halshs-00582556 is not listed on IDEAS

    More about this item

    Keywords

    Transaction costs; governance; hybrids; transportation;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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