Regulation vs. Deregulation
Transportation regulation has always been an important aspect of business logistics and supply chain management. In the 19th century, the railroads introduced a new mode of transportation that businesses could take advantage of, and in the beginning there was very little regulation of the railroads. Today, regulation exists for all modes of transportation. This paper will compare and contrast how regulation versus deregulation has impacted transportation and discuss some of the major influences on both regulating and deregulating the transportation industry. It will also describe the effects that globalization has had on regulations and show that consumers can benefit from both regulation and deregulation.
Regulation has impacted transportation in a number of different ways. It has enabled monopolies to be broken up, made the industry safer, and given leverage to laborers and unions. The first regulation of the railroads went into effect with the Interstate Commerce Act of 1887, which effectively broke up the railroad monopolies that were strangling competition in the transportation industry (Gilligan, Marshall & Weingast, 1989). The Interstate Commerce Act controlled who could enter and exit the industry and also set caps on rates where competition was light to protect consumers. With trucking transportation in the first half of the 20th century, the problem was the opposite: there was too much competition, which was causing some transporters to slash prices so low that they were not even covering their own costs and instead were abandoning proper maintenance protocols and causing unsafe working conditions to proliferate (Thoms, 1983). Prior to regulation of the trucking industry, consumers benefitted from extremely low prices because of extensive competition; however, with regulation came stricter codes that transporters had to meet, which caused prices to go up for consumers....
References
Gilligan, T. W., Marshall, W. J., & Weingast, B. R. (1989). Regulation and the theory of legislative choice: The Interstate Commerce Act of 1887. The Journal of Law and Economics, 32(1), 35-61.
Grennes, T. (2017). Does the Jones Act Endanger American Seamen. Regulation, 40, 2-4.
Kahn, A. E. (2002). The deregulatory tar baby: The precarious balance between regulation and deregulation, 1970–2000 and henceforward. Journal of Regulatory Economics, 21(1), 35-56.
Riles, A. (2014). Managing regulatory arbitrage: A conflict of laws approach. Cornell Int'l LJ, 47, 63.
Thoms, W. E. (1983). Rollin'on... to a free market motor carrier regulation 1935-1980. Transp. LJ, 13, 43.
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