Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information
American Economic Review
vol. 93,
no. 3, June 2003
(pp. 551-572)
Abstract
Explaining patterns of asset ownership is a central goal of both organizational economics and industrial organization. We develop a model of asset ownership in trucking, which we test by examining how the adoption of different classes of on-board computers (OBCs) between 1987 and 1997 influenced whether shippers use their own trucks for hauls or contract with for-hire carriers. We find that OBCs' incentive-improving features pushed hauls toward private carriage, but their resource-allocation-improving features pushed them toward for-hire carriage. We conclude that ownership patterns in trucking reflect the importance of both incomplete contracts and of job design and measurement issues.Citation
Baker, George, P., and Thomas N. Hubbard. 2003. "Make Versus Buy in Trucking: Asset Ownership, Job Design, and Information ." American Economic Review, 93 (3): 551-572. DOI: 10.1257/000282803322156981JEL Classification
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L92 Railroads and Other Surface Transportation
- L22 Firm Organization and Market Structure
- M54 Personnel Economics: Labor Management
- O33 Technological Change: Choices and Consequences; Diffusion Processes