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Deregulation and the competitive fringe: Owner-operators in the trucking industry

Abstract

This paper assesses the direct and indirect effects of regulatory reform in the trucking industry on the employment of owner-operators. We utilize a probit estimation form derived from driver utility functions to estimate the change in the probability that a truck driver is an owner-operator following deregulation.

We find that a representative driver with mean characteristics is 155.6 percent more likely to choose employment as an owner-operator in the deregulated environment. Thirty-six percentage points of this increase is due to the indirect effects of deregulation, which operate primarily through changes in wage differentials and unionization. The direct effect of deregulation accounts for a 120% increase in the probability of a driver choosing employment as an owner-operator.

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Additional information

We are especially grateful to David Besanko, Ronald Braeutigam, Robert Drago, and John Heywood for insightful comments. For helpful discussions, we thank Marcus Alexis, Aaron Gellman, Leon Moses, Robert Porter, Ian Savage, Mark Shanley, Carol Simon, Paul Wolfson, and Christopher Udry. For their comments on an earlier draft, we thank Thomas Corsi, Curtis Grimm, and Theodore Keeler. We are grateful for information sent to us by Leon Witconis ofOwner Operator Magazine and William A. Coop ofRoad King Magazine. We acknowledge financial support from the National Science Foundation, Grant # SES-9111131 and from the Transportation Center of Northwestern University. We also thank two anonymous referees for their efforts in helping us to improve this paper.

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Peoples, J., Peteraf, M. Deregulation and the competitive fringe: Owner-operators in the trucking industry. J Regul Econ 7, 27–42 (1995). https://doi.org/10.1007/BF01062778

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Keywords

  • Direct Effect
  • Indirect Effect
  • Utility Function
  • Public Finance
  • Industrial Organization