Information, Decisions, and Productivity: On-Board Computers and Capacity Utilization in Trucking

Abstract

Productivity reflects not only how efficiently inputs are transformed into outputs, but also how well information is brought to bear on resource allocation decisions. This paper examines this empirically by looking at how on-board computer (OBC) adoption has affected capacity utilization in the trucking industry. Estimates using 1997 data indicate that capacity utilization has increased by an average of 13% among trucks for which advanced OBCs have been adopted. The average benefits to adopters are higher in 1997 than 1992, suggesting lags in the returns to adoption, and are highly skewed across hauls. The 1997 estimates imply that OBC-enabled improvements in decision-making have led to 3% higher capacity utilization in the industry, which translates to billions of dollars of annual benefits. The commercialization of other wireless networking applications has the potential to generate analogous benefits in other contexts.

Keywords: resource allocation, technology, wireless, networking

JEL Classification: E23, D24, L92, O33