Paper #292

Title:

Quasi-integration in less-than-truckload trucking

Authors:

Alberto Fernández, Benito Arruñada and Manuel González

Date:

June 1998 (Revised: July 2002)

Abstract:

This work studies the organization of less-than-truckload trucking from a contractual point of view. We show that the huge number of owner-operators working in the industry hides a much less fragmented reality. Most of those owner-operators are “quasi-integrated” in higher organizational structures. This hybrid form is generally more efficient than vertical integration because, in the Spanish institutional environment, it lessens serious moral hazard problems, related mainly to the use of the vehicles, and makes it possible to reach economies of scale and density. Empirical evidence suggests that what leads organizations to vertically integrate is not the presence of such economies but hold-up problems, related to the existence of specific assets. Finally, an international comparison hints that institutional constraints are able to explain differences in the evolution of vertical integration across countries.

Keywords:

Hold-up, hybrids, institutions, moral hazard, vertical integration, trucking industry

JEL codes:

D23, L14, L22, L92

Area of Research:

Statistics, Econometrics and Quantitative Methods

Published in:

C. Ménard, (ed.), Institutions, Contracts and Organizations, Edward Elgar, Cheltenham and Northhampton, 2000, 293-312

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