Open AccessThe Process Of Post Regulatory Changes And Industry Development Following Motor Carrier Deregulation: An Intervention And Profitability Study
Author(s) -
Walter P. Nelly,
Patrick A. Taylor
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v14i3.5702
Subject(s) - deregulation , motor carrier , profitability index , competitor analysis , earnings , business , profit (economics) , shareholder , competition (biology) , industrial organization , barriers to entry , monetary economics , economics , finance , market economy , market structure , corporate governance , marketing , microeconomics , engineering , ecology , truck , biology , aerospace engineering
The Motor Carrier Act of 1980 was supposed to make the U.S. motor carrier industry more economically efficient, largely by stimulating market entry. That entry would presumably depress industry earnings and returns to motor carriers equities. While we find a deregulated industry that offers easy entry to new competitors, incumbent firms do not exhibit lower stockholder returns as new firms go public. When profits are examined, however, returns on total capital and profit margins tend to decline for both incumbent and entrant firms. The increased risk and lower returns, documented by pre-deregulation studies give way to a competitive and stable post deregulation industry.