Baker Hubbard (2003) - Make Vs Buy In Trucking

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©, 2016


Baker, George, and Thomas N. Hubbard (2003), "Make Vs. Buy in Trucking: Asset Ownership, Job Design, and Information", American Economic Review, pp. 551-572. pdf


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 re- source-allocation-improving features pushed them toward for-hire carriage. We con- clude that ownership patterns in trucking reflect the importance of both incomplete contracts and of job design and measurement issues.