Rate regulation and economic efficiency in rural road goods transport
Citations
Altmetric:
Authors
Date
1976-08
Type
Discussion Paper
Collections
Fields of Research
Abstract
The justification for the setting of rate maximums and
minimums by the New Zealand Ministry of Transport for the rural
road goods transport industry is reviewed in the light of the
continuing need for greater efficiency in the farm servicing
industries. Doubts are raised as to the validity of the
original justifications in today's context. Because the rural
road goods transport industry provides an unscheduled service,
rate setting by Government is not clearly consistent with
economic efficiency. The forces of price competition are
not acting to reduce prices. Rather, farmers are paying for the
luxury of service competition with rates being fixed by a third
party, within a narrow range and on a cost plus criterion. It
is suggested that minimum rate controls should be removed,
that rates charged should more closely reflect cost differences
and that controls over entry to the industry should be relaxed.