Japanese regulation of truck transport

Flath, David

Since 1951 the ministry of transport has been vested with sweeping authority to restrict entry and set prices in commercial trucking. Perhaps it could have used this authority to cartelize the industry. The weight of evidence holds that it did not do so. There is little to suggest that the standard price schedules which the MOT continues to publicize and periodically revise are anything more than suggestions, widely disregarded by commercial trucking firms. There are no economies or diseconomies of scale and firms have expanded until industry profits are exhausted. The changes in truck transport regulation introduced in 1991 were mainly directed at freeing a new activity, parcel delivery service, from regulatory constraints, and spreading some of the benefits to others in the industry. The principle remaining effect of truck transport regulation in Japan has been to impose a cost on private trucking operations (companies that use their own trucks to deliver their own merchandise) by legally barring them from also undertaking commercial business. If this restraint were to be lifted, the supply of trucking services would be enlarged and in the transition to a new (zero profit) equilibrium commercial truckers would suffer losses and some would exit.

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Academic Units
Center on Japanese Economy and Business
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Center on Japanese Economy and Business Working Papers, 119
Published Here
February 9, 2011