Deregulation and Scale Economies in the U. S. Trucking Industry: An Econometric Extension of the Survivor Principle

OVER the past three decades, there has been much progress in the analysis of costs, production, and scale economies in U.S. industries, including transportation. And yet it can also be argued that accounting data (on which all such cost and production function estimation is based) do not give us a full story regarding scale economies in an industry. Among those who made this argument most forcefully was George Stigler, in a seminal article published in 1958. To provide evidence on scale economies with less use of accounting data, Stigler developed what he called the survivor technique, a model that others have used in subsequent studies.1 The present article extends the survivor technique so as to make it a part of an econometric (probit) model, somewhat akin to cost and production functions as they are estimated statistically but preserving the essential features of the survivor model developed by Stigler in the 1950s. The most important advantage of this approach is that it allows for the incorporation of a number of different variables to explain survivor