hereafter focus on those two businesses.

In the aerial business or aerial operation, a consignor hires trucks; an operator can carry only one consignor's freight in one truck. The regulator sets operating areas and issues licenses for each area. Operators with an aerial license could carry goods if and only if the origin and/or destination of the goods was located in the area for which the licenses were granted. The aerial operation resembles Truck Load services in the United States. Almost all trucking companies were categorized into aerial operators, and most of these carriers were small enterprises.

Another main category of trucking service was the line-haul operation. In this operation, a carrier provided scheduled service in licensed routes. This service resembles freight railway service, in that freight is transported from one terminal to another. It is easy to understand that their service needs some feeder and distribution services between consignors and terminal. Operators could consolidate goods collected from various shippers, carry them on a line-haul and then distribute or deliver to consignees. In this service, truck terminals were needed to assort and transship the freight, and the service was a systematic one. As a result, the line-haul operators were relatively large and fewer than the aerial operators. Some researchers insist that there could be economies of scale in the line-haul trucking operation. Almost all line-haul operators also had aerial licenses.

#### 3.2. Regulatory Change

In December 1989, the Japanese Diet passed two bills that aimed to reform the regulation of the trucking business and forwarders. These laws came into effect just one year later, in December 1990. The names of the new laws are the Motor-truck Transport Business Law and the Freight Forwarding Business Law. The former provides new regulation of the trucking business, and the latter deals with freight forwarders. As noted above, the regulation of trucking had been included in the Road Transport Law, while provisions concerned with forwarders were scattered in several transport business laws such as the Road Transport Law, the Civil Air Transport Law, the Railway Transport Business Law, the Maritime Transport Business Law, et al. In other words, one purpose of the enactment of the Freight Forwarding Business Law was to integrate divorced regulations on several forwarding businesses into one uniform provision. Since trucking services are concerned mainly with the Motor-truck Transport Business Law, we will focus on this law in the following parts of this section.

The most important feature of the Motor-truck Transport Business Law was the relaxation of regulations of entry and price setting; that is, the so-called reform of economic regulations. As explained above, under the Road Transport Law, no one could begin to operate a trucking business without a license, and the law provides the standard on which the regulator judged whether or not a license should be issued. Of these standards for new licenses, the most important and the most influential standard was the so-called supply-demand balancing clause. This clause said that a new license could be issued if and only if the balance of supply and demand in the market would not be disturbed by the new entry. This is a quantitative control of supply. Many scholars as well as economists criticize this clause: they claim that it cannot work well in principle.