Abstract

This article focuses on the difficulties faced by the transportation industry due to government regulations. In recent years, there have been ample indications that all is not well in the transportation industry. Carrier financial difficulties are followed quickly by criticism of the government role in the transportation industry. The close regulation of the industry for seventy five years leads to the conclusion that government controls and activities in this economic sector are more relevant and important than they would be in a non-utility industry, and proposals for reform typically include suggestions that the federal government do something. The problem is that the kind of government regulation applied to transportation is an awkward fit, unsuited for the economic conditions of the industry. Rate control in the transportation industry has existed on the federal level for seventy-five years, starting with the first Interstate Commerce Act in 1887. Initial legislation provided for control over maximum prices and discrimination against selected railroad customers. The initial rationale behind price fixing in transportation was fear of monopoly.