The Demand for Monitoring Technologies: the Case of Trucking*

This paper examines the demand for on-board computers in trucking, distinguishing between their incentiveand resource-allocation-improving capabilities. I find that monitoring’s incentive benefits are high when perquisitetaking is attractive to drivers, driver effort is important, and verifying drivers’ actions to insurers is valuable. These results are consistent with agency theory and suggest that networking applications will raise the productivity and pay of difficult-toevaluate workers. I also find that monitoring’s benefits are disproportionately resource-allocation-related when managerial decisions are least constrained. This suggests that networking applications’ monitoring capabilities raise the returns to delegation when resource allocation decisions are routine and lower them when they are not.