However, a competing hypothesis to the standard SCP paradigm is the efficient structure
hypothesis.
The efficiency hypothesis says that an industry’s structure arises because of superior
operating efficiency by particular firms. This hypothesis is based on the premise that firms with
low cost structures increase profits by reducing prices and expanding market shares. Therefore,
a positive relationship between firm profits and market structure exists because of gains made in
market share by more efficient firms. In turn, these gains lead to increased market concentration.
This suggests that increased profits accrue to firms with greater efficiency and not because of
collusive activities as suggested by the traditional structure-conduct-performance (SCP)
paradigm (Molyneux and Forbes, 1995).
The authors expect results from this study to show whether the market structure, market
share, and profits of the trucking industry as a group and by particular segments support the
efficiency structure hypothesis or the traditional structure performance hypothesis. Therefore, the
ability to estimate whether the market structure, market share, and profits of the trucking industry
supports either hypothesis should help in understanding how truck carriers operate as a group
and by particular segments. This should improve economic decisions where transportation
alternatives exist.
The information or knowledge derived from this study may help agribusiness commodity
and refrigerated food products carriers and other carriers of the U.S. trucking industry, policy
makers, financial institutions and individuals understand whether the market structure, market
share, and profits derived by these carriers are from market competitive forces or collusive
activities. If the results of this analysis show that market structure, market share, and profits are
the result of the efficiency structure hypothesis rather than from the traditional structure