An Econometric Analysis of Cost Changes in U.S. Trucking and the Implications of Implementing the NAFTA Trucking Provisions

• Main Author: Peterson, Erica Kay
• Format: Others
• Published: North Dakota State University 2019
• Subjects: Trucking > United States > Costs > Mathematical models.; Trucks > United States > Cost of operation > Mathematical models.; Free trade > North America.
• Online Access: https://hdl.handle.net/10365/29800

The United States trucking industry underwent deregulation starting in 1980. There was much opposition to the process in fears that trucking companies would be adversely affected by increased competition. There were also many proponents and researchers who proved that the increased competition due to regulatory reform only helped strengthen the industry by forcing firms to become more cost efficient. There has been similar opposition and support for the trucking provisions of NAFTA. Although the provisions have not been fully implemented, the trucking industry is well aware it will only be a matter of time. In early 2002 it was announced that the process to begin implementing the trucking provisions would begin in mid-2002. Many in the industry and other groups have opposed implementing the provisions, concerned that U.S. trucking firms would be subject to competition from Mexican firms, just as they feared trucking firms would be adversely affected by deregulation more than 25 years ago. This thesis analyzes the effects the 2002 announcement of the process to begin implementing the trucking provisions has had on the cost structure of the industry. It uses a translog cost function to determine if firms have become more efficient in the years following the announcement in anticipation of increased competition from Mexican firms after the provisions are fully implemented. The translog cost function is used to determine what effects the NAFTA variable has had on costs and what specific operating characteristics have caused the costs to increase or decrease.