Public Choice

, Volume 79, Issue 3, pp 247-256

First online:

The economic theory of regulation and trucking deregulation: Shifting to the state level

  • Paul TeskeAffiliated withPolitical Science Department, SUNY Stony Brook
  • , Samuel BestAffiliated withPolitical Science Department, SUNY Stony Brook
  • , Michael MintromAffiliated withPolitical Science Department, SUNY Stony Brook

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Federal deregulation of the trucking industry in 1980 created a general gain in economic welfare at the expense of the monopoly rents of powerful interests, leading some scholars to ponder the limitations of the economic theory of regulation. However, analyzing only the federal changes excludes evidence from the significant intrastate sector of the trucking industry, regulation of which remains largely unchanged from that prior to 1980. This paper argues that after a decade of clear federal policy success, truckers continue to capture most state regulators, sustaining monopoly rents in what would otherwise be an inherently competitive industry. Using data from the fifty states, we demonstrate the extent to which the economic theory is in fact consistent with trucking industry evidence.