The rapid economic growth and increase in highway investment in the past few decades have resulted in significant development of motor carrier industry and made it the most dominant inland freight transportation mode in Taiwan. Unfortunately, the cost structures of both domestic Truckload(TL) and Less-Than-Truckload(LTL) motor carriers in Taiwan have never been carefully investigated. Therefore, this study aims to develop a flexible translog cost functions for these carriers and to analyze their economic characteristics (ex. economies of density, elasticity of output, elasticity of input price, average cost and marginal cost). With these economic characteristics, we can interpret the current situation of the TL and LTL markets; moreover we can examine if regulated policies made for two carriers are suitable. Empirical analyses were performed using 1997 cross-section data for TL motor carriers, and the panel data(1991-1997)for LTL motor carriers. The major findings include: (1) The main factor causing the significant difference in the cost structure for TL is average length-of-haul, rather than total revenues or tonnage carries as in other countries; (2) TL has economies of density” while LTL has only weαk economies of density; (3) Among factors of input, fuel price has the most significant influence on TL’s cost, while labor price on LTL’s; (4) Both LTL and TL have evidence of economies of load size and length-of-haul (but only short haul TL has significant economies of length-of-haul); (5) The regulated price of TL is found to be higher than the equilibrium price from the analysis of their density economies, marginal cost and average cost. This has led to the cutthroat price competition among TL carriers, and so the price of TL should be deregulated; (6) Since LTL has only weak economies of density, A price ceiling with considerable downward flexibility in fares policy can be used.