If the market is subject to these or other imperfections, prices fail to adjust
and inefficient outcomes persist. For example, market mechanisms—by
raising trucker pay—should cause a trucker shortage to be resolved
automatically, and over a relatively short time horizon. A shortage of any
good or service means that the value to consumers of another unit of that
good or service is greater than its current price. It also means that producers
could make a profit on the sale of an additional unit if they could raise the
price. Prices rise and the shortage fades because producers and consumers
both benefit from higher prices.
Specific to our present example, trucking companies can profit from
increased wages if doing so allows them to hire more truckers, so truckers’
wages should rise. That, in turn, will lead to an increase in the number of
truckers offering their services.9 Some will be experienced truckers that have
retired or taken other employment, but will be lured back by higher wages.
Others will be new truckers that, while determining how to spend their
working years, see a higher wage for truckers and choose that profession as
opposed to some other. 10 Regardless of the source, economics predicts that,
over time, the shortage of truckers should diminish as truckers’ wages rise.
Unfortunately, that does not appear to be happening, in that wages have
remained relatively constant; thus, a shortage has persisted. 11 This runs
counter to economic predictions and raises the possibility that some market
failure is keeping wages from rising. However, it is just a possibility because
obstacles to proper market function can arise from within or without. To be
more precise, when a market fails to function as predicted—whether in the
form of an apparent externality, concentrated market power, information
asymmetries, or any other form of interference—the impediments may have
been created by the government, particularly government regulation. 12
9. This is a simple application of the Law of Supply. BUTLER, supra note 4, at 58.
10. In both cases, raising the wages of truck drivers increases the cost of not choosing to
be a trucker. This will not be enough to convince everyone to become a trucker, but it will
convince those who are on the fence about trucking versus some other profession—those at
the margin, in economic terms—to choose trucking.
11. Some industry experts have predicted a rise in wages, Chris Isidore, J. B. Hunt Pay
Hike Will Jolt Industry, J. COM., Sept. 9, 1996, at 1A, but that increase has never materialized,
at least not in a way that has lessened the shortage.
12. E.g., Jeremy Kidd, Kindergarten Coase, 17 GREEN BAG 141, 149–50 (2014). The idea
that government actions might have unintended consequences is certainly not new. After all,
the fact that government services are “purchased” by taxpayers by way of an involuntary
mechanism removes most of the incentives that lead voluntary transactions in the market to
be efficient. Wolf, supra note 3, at 113–19. Importantly, the possibility of government failing
and achieving undesirable outcomes is not based on government agents being somehow
different than private individuals; rather, government can fail because it is peopled by the very
same type of individuals who comprise the market. See, e.g., McKean, supra note 2, at 497–