There are two possible outcomes of transport regulation: (1) maintaining a carrier cartel and (2) imposing equalizing discrimination against advantaged and in favor of disadvantaged shippers. Both functions have required a complex rate structure to enforce the respective forms of price discrimination. Using a sample of freight bills from motor carriers and railroads, this paper demonstrates that the principal result of motor carrier regulation has been to maintain a cartel of truckers, while railroad regulation has thwarted the wishes of the railroad cartel by imposing equalizing discrimination on weak and strong shippers. Motor carrier rates respond in an economically rational manner to costs and shipper bargaining power; rail rates are either unresponsive or perversely responsive to the same factors. Deregulation should have divergent effects in the two industries.

Contrary to popular opinion, the diversion of traffic from railroads to motor carriers has not been the result of minimum rate regulation. The idea that there is a large amount of misallocated traffic is based on the widespread but faulty method of analyzing intermodal competition by means of a simple cost comparison. The paper uses modal split analysis to show that the welfare gain accompanying minimum rate regulation will be modest. The welfare effects of transport controls other than minimum rate regulations are likely to be far more serious.

T HIS paper attempts to show that there is merit in the long-standing but much abused distinction between 'informative' and other types of advertising, and that this difference is revealed in a differential effect on economic performance. After a brief literature survey, section II develops a theoretical distinction between informative and goodwill advertising. Section III outlines a test of the hypothesis that the different kinds of advertising will have opposite effects on market performance. Section IV presents the results of this test. Section V summarizes and relates the results to other recent work on the economics of advertising.

There are two possible outcomes of transport regulation: (1) maintaining a carrier cartel and (2) imposing equalizing discrimination against advantaged and in favor of disadvantaged shippers. Both functions have required a complex rate structure to enforce the respective forms of price discrimination. Using a sample of freight bills from motor carriers and railroads, this paper demonstrates that the principal result of motor carrier regulation has been to maintain a cartel of truckers, while railroad regulation has thwarted the wishes of the railroad cartel by imposing equalizing discrimination on weak and strong shippers. Motor carrier rates respond in an economically rational manner to costs and shipper bargaining power; rail rates are either unresponsive or perversely responsive to the same factors. Deregulation should have divergent effects in the two industries.

Contrary to popular opinion, the diversion of traffic from railroads to motor carriers has not been the result of minimum rate regulation. The idea that there is a large amount of misallocated traffic is based on the widespread but faulty method of analyzing intermodal competition by means of a simple cost comparison. The paper uses modal split analysis to show that the welfare gain accompanying minimum rate regulation will be modest. The welfare effects of transport controls other than minimum rate regulations are likely to be far more serious.