PROMOTING COMPETITION IN REGULATION MARKETS

The order of magnitude of the cost of regulation is estimated, the proposals for reducing or eliminating regulation are considered, and the costs of these alternatives are compared with the present system. Regulation of trucking limits ability of such trucks to secure backhauls, and the legal restrictions on private and agricultural motor carriers force trucks to travel empty a considerable portion of the time. The shifting of traffic from low-cost to high-cost modes, pricing above marginal cost (allocative cost caused by the non-shipment of goods due to higher prices) are additional costs to the economy. The low, medium and high estimates of the total losses from regulation range from nearly $4 billion to almost $9 billion. Deregulation alternatives considered here range from trivial modifications of Interstate Commerce Commission regulations to major changes such as totally abolishing the Commission. Partial deregulation alternatives include: removing minimum rate regulation (it may be better to abolish all rates); repeal of the Read Bulwinkle Act (this by itself would not reduce losses); and deregulating trucking (feasible but could lead to new costs). Total deregulation and the feasibility and effectivity of open competition in the various transportation industries is discussed, and the possibility that this would lead to predatory pricing, price discrimination, and intermodal ownership is considered. Comments are made on modified deregulation, and the possibility of a legal framework to produce most of the gains from deregulation but reduce the likelihood of monopolized markets and other disadvantages (Canadian legislation serves as a model) are discussed.

  • Corporate Authors:

    Brookings Institution

    1775 Massachusetts Avenue, NW
    Washington, DC  United States  20036
  • Publication Date: 1975

Media Info

  • Features: Figures; Tables;
  • Pagination: 397 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00134765
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 23 1976 12:00AM