Motor Carrier Regulation and Service to Small Communities

Debate prior to passage of the Motor Carrier Act of 1980 concerned deregulation's effects on motor carrier service to small communities. The Interstate Commerce Commission's (ICC) regulatory role in promoting service to small communities is therefore assessed, with empirical measurement of the extent to which small-community services are voluntarily provided and the degree to which the ICC induces such services via incentives and/or coercion. The dependent variable is the price paid by carriers for operating rights. Independent variables include: 1. population, 2. number of competing intramodel carriers, 3. length of haul, and 4. route integration. Sample bias is shown to be nonexistent. The empirical analysis to operating rights to authorize service involves small communities with populations of fewer than 100,000. Regression analysis shows that not all small-community regular-route general-commodity operating rights were profitable. This finding does not support the claim that ICC regulation has caused a sizable increase in the number of small communities that receive trucking services over those that would receive such services if regulations were relaxed. Thus, ICC policies have done little to promote service to smaller communities.