Essays on Regulation in Transportation Markets

Abstract

This dissertation examines the effects of regulation in transportation markets in the context of the Greek road freight transportation sector.

In the first chapter, I present the sector’s institutional framework in detail and provide evidence of the ways it shaped the country’s transportation profile until its reform. A regulatory cap on the number of for-hire vehicles, that was in effect for forty years, compelled producers to acquire and operate own-account trucks within their firms. Using a novel dataset combining administrative and survey data, I document that this regulatory constraint led to a larger, older and underutilized commercial vehicle fleet that pollutes more per unit of transportation work compared to European averages. I also document how a requirement for emission-efficient vehicles after the reform raised entry costs for potential entrants and affected the structure of the for-hire market by decreasing entry.

In the second chapter, I quantify the effects of the regulation in terms of fleet size, utilization rates and air emissions through a study of firm boundaries. I specify and estimate a dynamic structural model for firms’ make versus buy choice for product transportation, allowing for taste heterogeneity and transaction costs, and find evidence that the regulation indeed steered firms to own-account carriage. Using the estimated model, I simulate counterfactuals and find that, in the absence of the regulation, the total commercial fleet is 23.6% smaller, average truck utilization improves by 3.05 percentage points and the sector’s carbon dioxide emissions decline by 5.9%, driven by a shift from own-account to for-hire transportation.

In the third chapter, I study the post-reform evolution of the for-hire sector, quantifying the effect of the imposed environmental requirement on market structure. I specify and estimate a dynamic model of entry and exit in the for-hire transportation market, taking into account short-run competition as well as the distribution of entry costs and firm sell-off values. I find that a looser environmental requirement would have supported a 7.3% increase in active for-hire operators. Combined with the evidence in the second chapter, the results suggest that the environmental requirement missed its objective.