An Empirical Examination of Market Access

Market access in regulated and unregulated markets: The continuing cost of interstate motor carrier regulation

“…A number of recent studies indicate that regulatory reform has had dramatic and positive effects on competitiveness and productivity (e.g., McMullen 1987;McMullen and Stanley 1988;Keeler 1989;Ying 1990a;1990b;Ying and Keeler 1991;and Boyer 1993). However, still other studies suggest that remaining restrictions continue to detract from economic efficiency by limiting the access carriers have to markets (e.g., Beilock and Kilmer 1986;Wilson and Dooley 1993). The latter studies focus on the effects regulatory reform has had on carrier decisions to serve markets in which the Interstate Commerce Commission (ICC) has historically been active in restricting entry.…”

“…Many carriers still operate without Authorities .3 There are a variety of possible explanations for the observation that many carriers do not have an Authority. Interviews with carriers and industry analysts and other research suggest an aversion to regulation, a preference for driving, and a perception (perhaps a misperception) that the costs of authority are high relative to benefits (Horn 1984;Felton 1989;Beilock and Freeman 1991;Wilson and Dooley 1993). 4 In transportation studies, origin-destination pairs typically define a market.…”

“…In Beilock and Kilmer (1986), analyzing the same traffic in 1982-83, 31 percent of carriers held authority. In Wilson and Dooley (1993), analyzing traffic in and out of North Dakota in 1986, only 40 percent of carriers held authority. Rodriguez (1991), documenting the same population in 1991, reports that about 50 percent of carriers held authority.…”

“…Unregulated carriers have direct access only to unregulated freight, but may acquire regulated freight indirectly by, for example, leasing their services to other carriers that hold the requisite Authorities, pointing to higher costs in accessing markets. 5 Wilson and Dooley (1993) develop a model that recognizes the differences in costs for regulated and unregulated carriers. In that model, revenues from the trip must compensate the costs of unregulated carriers for both unregulated and regulated carriers to coexist.…”

“…Previous studies that examine the effects of entry regulation on market access use data that pertain to only one leg of a trip. In those studies (Beilock and Kilmer 1986;Wilson 1987;Wilson and Dooley 1993) the authors examine carrier decisions to access markets having a preponderance ofregulated traffic. Using different specifications and data, Beilock and Kilmer (1986) and Wilson and Dooley (1993) each find that carriers with Authorities have an advantage over carriers without Authorities in accessing markets.…”