Suppose you are a member of the board of directors of a trucking company that operates tank trucks carrying bulk

Suppose you are a member of the board of directors of a trucking company that operates tank trucks carrying bulk liquids between Florida and New York. In all the states along the route between Florida and New York except Pennsylvania, trucks are permitted a maximum weight of up to 60,000 pounds (including the equipment), but in Pennsylvania the maximum weight is 45,000 pounds. The penalty for violation of the maximum weight law is a fine of $200. Under Pennsylvania law it is plain that the fine is “penal”; it is not regarded as a type of toll or use tax. The risk of being caught and fined on any one trip is about 20 percent. The practice of your corporation and, as far as you are aware, of all your competitors, is to ignore the 45,000 maximum weight law and treat the fines as a cost of doing business. The alternative is either to comply with the 45,000 pound limit along the entire route or to reduce the load at the border of Pennsylvania, carry the excess to the other border in another truck, and then load the excess back onto the through-route truck. The cost of either alternative would make it impossible to compete with other trucking firms and with individual truckers and with other forms of transportation without losing money. Moreover, compliance with the 45,000 limit would require carrying less than a full load and would increase safety hazards. You have just learned of these facts. What do you do?

Expert Answer

 Let us first analyze the economic aspect. The penalty of violation of maximum weight law in Pennysylvania is $ 200 and the chances of being caught and fined on any trip is 20 percent. Therefore, the expected penalty cost is $200*20% = $40. Now consider the alternatives of either complying with the weight limit or to reduce the load at the border of Pennysylvania, carry the excess in another truck and the load the excess back onto the through route truck, are not economically viable, as both of these alternatives make the operations uncompetitive. The other drawback of compliance with the 45000 limit is that it increases safety hazards. Considering all these aspects, I would incorporate the penalty cost into the cost of operations and would carry 60000 pounds only. I would also write to the administration of Pennysylvania to review the maximum weight limit law, by giving them the practical economical reasons as well as the safety concern.
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