The annual and pooled data analyses above tested the standard SCP and the efficient
hypothesis based on the premise that less efficient firms would not survive over time. This is
consistent with economic theory, which suggests that, in a competitive industry, inefficient firms
will not compete and will be forced out of business in the long run (McMullen, 1997). Therefore,
the market structure, profits and market share of the survivor firms were tested. In this analysis, a
survivor firm is a firm that Motor Carrier Number (MCN) appears in the data set during the
entire study. Thus, if a firm enters the data set and does not stay the entire time it does not count
as a survivor in the study.
Results
The results for the annual estimates are shown in Table 1. Data in Table 1 reveals that
profits made in the trucking industry were primarily impacted by the variables MKS, CAE and
CAR during the study. These results imply the carriers operated in a highly competitive
environment and profits made by the carriers were not because of collusive activities but the
results of carriers being more efficient.
In all equations, the coefficients for the market share variables are highly significant and
the coefficients for the concentration ratio are not significant except in 1997. This suggests the
concentration ratio as well as the market share variable played a major role in the profits made
by the carriers providing transportation services to their customers in 1997. These findings
support the efficiency hypothesis and reject the structure performance hypothesis.
Results for the annual data further reveal the variable cash and equivalents (CAE) were
highly significant, indicating that profits for these firms were dependent upon the amount of cash
and equivalents the carriers had during the study. Also, the variable CAR, which represents the
capital- to- asset ratio was highly significant in the years 1997, 2000, and 2002 indicating that
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