The Review of Austrian Economics, 15:2/3, 229–255, 2002.
2002 Kluwer Academic Publishers. Manufactured in The Netherlands.
Regulatory Disequilibrium and Inefﬁciency:
The Case of Interstate Trucking*
BRUCE L. BENSON email@example.com (http://garnet.acns.fsu.edu/∼bbenson/)
Department of Economics, Florida State University, Tallahassee, FL 32306, USA
Abstract. Economic regulation is characterized as (1) an effort by special interests to inﬂuence the allocation of
property rights, in (2) a continuous path-dependent spontaneous evolution (as apposed to a static equilibrium),
driven by (3) market, political, and bureaucratic entrepreneurship in an ongoing discovery process. The implications
of the model are illustrated by an examination of the evolution of regulation in interstate trucking. The model is
also used to explain that the Chicago School’s political-regulatory efﬁciency conclusions are incorrect, and that
the inefﬁciencies arising from rent seeking are even greater than the Public Choice approach implies.
Key Words: rent seeking, spontaneous evolution, regulation, deregulation, property rights
JEL classiﬁcation: D72, L51, B53.
Two prominent theoretical approaches to the political economy of regulation began at
roughly the same time with the publication of two seminal papers. The Chicago-School’s
focus on regulation was stimulated by Stigler (1971) while the rent-seeking literature of
the Public Choice School traces to Tullock (1967).
These two approaches actually have
much in common (Tollison 1982). They both reject “public interest” or “market failure”
explanations for regulation that dominated mainstream economics before their publication,
emphasizing instead that regulation is the outcome of a political competition between rela-
tively narrowly focused interest groups seeking wealth transfers or artiﬁcial rents. Both also
rely on static equilibrium modeling. Nonetheless, they diverge in their conclusions regarding
the efﬁciency of such transfer processes. While the rent-seeking literature tends to stress the
inefﬁcient “waste” of resources consumed in the political competition, a Chicago-School
emphasis on the efﬁciency of the political/regulatory process (e.g., Posner 1974, Becker
1983, Wittman 1989, Stigler 1992) traces, at least in part, to Stigler (1971). One purpose of
the following presentation is to demonstrate that the Chicago School’s efﬁciency conclu-
sions are incorrect, except perhaps in a very limited and generally uninteresting sense. A
second purpose is to illustrate that the inefﬁciencies are even greater than the Public Choice
This paper was prepared at the invitation of Edward J. Lopez and Peter Boettke, co-editors of a symposium issue
of The Review of Austrian Economics on “Austrian and Public Choice Approaches to Political Economy.” I want
to thank the editors and an anonymous referee for very helpful comments and suggestions. The paper is part of
a larger project on the “Evolution of Law” which has been supported by two Earhart Fellowships and by grants
from the Carthage Foundation and the Institute for Humane Studies.