Railroad Deregulation Research Articles

European Railroad Deregulation. Does it work?

<p><em>We analyzed the performance of the European railway public system over the period 2004 to 2014 in which the sector was subject to a substantial restructuring process and implementation of numerous deregulation and liberalization measures with the aim to revitalize the railway. This paper estimates simultaneously a model of stochastic production frontier and a model of technical inefficiency for 16 countries. The results show technological progress and improve on technical efficiency, but it is also noted the important cuts in inputs. The network heterogeneity shows that railroad systems with down network density and high percentage of electrified network are more efficiency. Likewise, we have analyzed the impact of subsidies and reforms implemented on railways efficiency. Maintenance subsidies improve efficiency due to reductions of incidents on the rail network, let more efficient and reliable service. While, operating subsidies have a negative effect because improve inefficient behavior. By the other hand, reforms have not had the expected results. </em><em>We find that vertical separation is not necessary to achieve efficiency gains. T</em><em>he opening passenger market seems to lead to a greater efficiency gain, but freight market shows negative results although this result can be influenced by unfavorable economic context.</em><em></em></p>

Firm Competition and CEO Turnover: Evidence from US Railroad Deregulation

AbstractIn this article, I examine how changes in the competitive environment of firms affect matches between chief executive officers (CEOs) and firms. I exploit the 1980 Staggers Rail Act, which drastically deregulated the freight railroad industry, as a source of arguably exogenous variation in the operating environment. Using hand‐collected data, I obtain three main findings: first, CEO turnover rates increase; second, relative to utility firms, railroad CEOs have more business education and show broader work experience after deregulation; and third, firm performance leads to CEO turnover only during the regulated period.

The SO2Allowance Trading System: The Ironic History of a Grand Policy Experiment

Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2cap-and-trade system. That system performed well but created four striking ironies: First, by creating this system to reduce SO2emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system's cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, as this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2market, demonstrating that what the government gives, the government can take away.

The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.

The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment

Two decades have passed since the Clean Air Act Amendments of 1990 launched a grand experiment in market-based environmental policy: the SO2 cap-and-trade system. That system performed well but created four striking ironies. First, by creating this system to reduce SO2 emissions to curb acid rain, the government did the right thing for the wrong reason. Second, a substantial source of this system’s cost-effectiveness was an unanticipated consequence of earlier railroad deregulation. Third, it is ironic that cap-and-trade has come to be demonized by conservative politicians in recent years, since this market-based, cost-effective policy innovation was initially championed and implemented by Republican administrations. Fourth, court decisions and subsequent regulatory responses have led to the collapse of the SO2 market, demonstrating that what the government gives, the government can take away.

Should Genesee & Wyoming Go Down Under?

The Case takes place at the headquarters of Genesee & Wyoming, Inc. (GWI), one of the leading short line railroads in the United States. The Case revolves around three executives - Mortimer B. Fuller III, Chairman and CEO, Mark Hastings, CFO and Treasurer, and Alan Harris, Senior Vice President and Chief Accounting Office - and the dilemma over whether to pursue international expansion.GWI has generally pursued a strategy of diversification through acquisition. However, there are other approaches to diversification, including international expansion. With increasing deregulation and privatization of railroads around the world, GWI and its competitors must weigh the risks of internationalization with the rewards. GWI fears that a failure to move quickly might result in missed opportunities as competitors acquire railroads around the world.An opportunity has recently arisen in Australia, where the government is selling Australian National Railway. GWI believes Australia might be a good initial foray into the international market given the similarities of the country and its railroad industry to the United States and its railroad industry. The Case asks the question, “Should GWI enter the bidding?”

The best transportation system in the world: railroads, trucks, airlines, and American public policy in the twentieth century

This book describes how, from 1920 to the mid-1990s, American transportation in the form of railroads, trucks, and airlines were simply a creature of politics and public policy. In brief, the markets for rail, truck, and airlines were not natural entities, but had been created through hard-fought political contests, full time lobbying, and increasing litigation. Leaders of rail, truck, and airline firms lobbied and litigated to protect the workings of this regulatory regime between 1940 and the late 1970’s. In the mid-1950s, President Eisenhower asked Congress to award railroad executives authority to modify prices and service. He was concerned about a railroad industry in decline. During the 1960s, President Johnson sought broad deregulation of rail, truck, and airline firms. He wanted another device to “fine tune” the economy. In the 1970s, Presidents Nixon, Ford, and Carter sought to deregulate transportation with a view toward reversing “stagflation.” Between 1978 and 1980, Congress and President Carter approved deregulation of airlines, trucking, and railroads. President Carter’s aide, Mary Schuman, played a crucial role in bringing about airline deregulation. For all the market talk that surrounded transportation policies before and after 1980, however, officials of the American state had been and remained the principal agents creating those markets. The book persuasively argues that it was history and politics, not markets and competition that determined public policy toward transportation from 1920 through 1980. Skillfully pulling together the histories of the various modes of transportation, the book makes the case that politics was more significant than technical expertise.

Deregulation of railroads and future development scenarios in Europe: analysis of the privatisation process taken place in the USA, the UK and Sweden

A decade ago, the European Union decided that railways should be privatised and deregulated (effective from 2007 onwards). Due to the recent enlargements of the EU and the risk of failures in the decision-making process, it is important to examine early adopters of deregulation policies. We analyse literature and use second-hand quantitative material to thoroughly review this process concerning three different countries (USA, UK and Sweden). In all three cases, the deregulation process has brought positive performance improvements in the long-term perspective, but in the short to medium term, there are a number of problems and warning examples, especially arising from UK case.

The determinants of train fatalities: keeping the model on track

This paper addresses the determinants of three types of railroad related fatalities: trespasser fatalities, those at grade crossings, and those involving passengers and employees. Of particular interest are the effects of railroad deregulation (the Staggers Act) on railroad related fatalities. Models are developed using specification error analysis and seemingly unrelated regression. Deregulation of the railroads is shown not to have contributed to fatalities while alcohol consumption is found to be a significant contributor to trespasser as well as passenger and employee fatalities. Expenditures on safety are also found to reduce railroad related fatalities.

Railroad Deregulation and Consumer Welfare

Railroad deregulation under the Staggers Act of 1980 generated rate reductions, service enhancements, and other improvements in economic welfare. These benefits appear to be widely shared. There is a low likelihood that some captive shippers pay rates that exceed the rates they would have paid under regulation, some evidence that some captive shippers have paid rates that regulators would judge “unreasonable,” and strong evidence that captive shippers pay higher rates than non-captive shippers. The source of deregulation’s benefits is as noteworthy as their size and distribution. The principal benefits of railroad deregulation stem from cost reduction, not just a closer alignment of prices with pre-deregulation cost levels.

The Future of Market Regulation

Market regulation is accomplished both by competition and by external government agencies, and the trend is toward greater reliance on competition. Economists have fostered this trend and have even invented markets to help overcome some externality problems. They have contributed to a steady improvement in antitrust policy, which currently reflects economic knowledge well. They diagnosed and demonstrated problems with external regulation of the airline industry and gave assurance that regulation by competition could work in its place. Success there led not only to deregulation of airlines but also deregulation of railroads, trucks, buses, and, in some ways, natural gas pipelines. Two other industries, telecommunications and electricity, are now following very ambitious paths toward less external regulation and greater dependence on competition. The Internet raises new issues, but there also, competition will play an important regulatory role.

The Future of Market Regulation

Market regulation is accomplished both by competition and by external government agencies, and the trend is toward greater reliance on competition. Economists have fostered this trend and have even invented markets to help overcome some externality problems. They have contributed to a steady improvement in antitrust policy, which currently reflects economic knowledge well. They diagnosed and demonstrated problems with external regulation of the airline industry and gave assurance that regulation by competition could work in its place. Success there led not only to deregulation of airlines but also deregulation of railroads, trucks, buses, and, in some ways, natural gas pipelines. Two other industries, telecommunications and electricity, are now following very ambitious paths toward less external regulation and greater dependence on competition. The Internet raises new issues, but there also, competition will play an important regulatory role.

The impact of railroad mergers on grain transportation markets: a Kansas case study

Abstract While there have been many studies of the impact of railroad deregulation on agricultural transportation markets there have been very few that address the impact of railroad mergers on rail grain prices and the distribution of efficiency gains. The purpose of this paper is to add to the sparse literature regarding the effect of railroad mergers on agricultural transportation markets. Given the ever declining number of Class I railroads, this research is very timely. The specific objectives of the research are as follows: (1) Analyze the impact of the Burlington Northern (BN)–Santa Fe (SF) merger on the ability of the BNSF to increase prices on movements of Kansas wheat to Houston, Texas. (2) Analyze the impact of the Union Pacific (UP)–Southern Pacific (SP) merger on the ability of the UPSP to increase prices on movements of Kansas wheat to Houston, Texas. (3) Analyze changes in Kansas wheat logistics system costs as a result of the BN–SF and UP–SP mergers. Two models are developed to achieve the objectives of the study. A network model of the wheat logistics system is used to identify the least cost transportation routes from the Kansas study area to the market at Houston, Texas. A profit improvement algorithm is developed to measure the amount by which railroads can raise their prices above variable cost. The BNSF and UPSP achieve only minor increases in market power (measured by the ratio of revenue to variable cost) because the merged railroads have only slight advantages in cost relative to other railroads that serve the same areas as the merged railroads. Wheat shippers benefit from merger-induced reductions in transportation and handling costs. Shippers are likely to capture a significant share of these cost reductions since intrarailroad competition is present after the mergers. Transport cost reductions accompany mergers due to more direct routing of wheat shipments and the assumption that the merged railroad operates at the costs of the lower cost partner.

The Deregulation of the Telephone Industry: The Lessons from the U.S. Railroad Deregulation Experience

The deregulation of the telephone industry has been a major task of public policy for the U.S. for the past two decades. There have been some outstanding achievements but also some serious frustrations — especially in the deregulation of local telephone service, which is now a prime focus of public policy concern in telephony. Similar public policy concerns are now arising with respect to deregulation of telephone service in European and Pacific Rim nations.

COST SAVINGS AND PRODUCTIVITY IN THE RAILROAD INDUSTRY

Railroad deregulation has had tremendous effects on the level of costs and productivity gains. I use an unbalanced panel of railroads from 1978 through 1989 to estimate a translog cost function. I find that initially cost savings from partial deregulation were modest. However, by 1989, I find that cost savings were tremendous, with costs being up to 40 percent lower than they would have been under regulation. I also find that while initial effects of deregulation on productivity gains were large, these effects have fallen through time, and currently are comparable to pre-deregulation levels.

Terminating the oldest living regulator: the death of the interstate commerce commission

This paper examines the termination of the oldest federal regulatory agency, in light of existing policy termination theories. The need for the ICC was severely reduced by major deregulation of railroads and trucking in 1980, changes from which also reduced the ICC's ability to maintain external interest group support. Still, although its budget and staff were cut, the ICC survived intact for 15 more years, until budgetary politics found it to be a useful symbolic target for termination. We also argue that this case shows the utility of putting termination theory into the larger framework of policy change, a literature that itself has largely ignored the critical element of policy and organizational termination. ”Once you establish a commission … you have the devil's own time passing an act abolishing it.”(1).

Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor

The Staggers Rail Act of 1980 relaxed restrictions on pricing and eased abandonment procedures in the railroad industry. Although the Act made virtually no reference to labor, its impact on labor has been dramatic. The long-term contraction of industry employment accelerated quite sharply after 1980. Wages increased until 1985, then declined substantially. The authors, whose empirical analysis uses data on aggregate rail employment for the years 1963-90, Current Population Survey data for 1973-88, and evidence from collective bargaining agreements for 1971-90, argue that pricing adjustments under the Staggers Act led to changes in shipper behavior, which in turn allowed for large declines in the derived demand for rail labor despite increasing output, and the observed pattern of wage change followed from the realization of the Act's eventual effects on employment.

Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor

The Staggers Rail Act of 1980 relaxed restrictions on pricing and eased abandonment procedures in the railroad industry. Although the Act made virtually no reference to labor, its impact on labor has been dramatic. The long-term contraction of industry employment accelerated quite sharply after 1980. Wages increased until 1985, then declined substantially. The authors, whose empirical analysis uses data on aggregate rail employment for the years 1963–90, Current Population Survey data for 1973–88, and evidence from collective bargaining agreements for 1971–90, argue that pricing adjustments under the Staggers Act led to changes in shipper behavior, which in turn allowed for large declines in the derived demand for rail labor despite increasing output; and the observed pattern of wage change followed from the realization of the Act's eventual effects on employment.

Railroad deregulation, carrier behavior, and shipper response: A disaggregated analysis

The Staggers Rail Act of 1980 provided American railroads with almost complete relief from rate regulation. Regulatory reforms resulted in rapid and pronounced changes in firm behavior and an eventual reconfiguration of the industry as a whole. This investigation provides a highly disaggregated study of deregulated rail rates for seventeen commodities. The results indicate that the Staggers Act fundamentally altered the way in which rail carriers price their services. As importantly, the results suggest that shippers have responded to altered railroad behavior by changing the characteristics of their shipments. Together, the changes in railroad behavior and shipper responses to these variations have produced lower railroad rates for a small but measurable number of movements across a wide range of commodities.

Foreclosure of Railroad Markets: A Test of Chicago Leverage Theory

Previous articleNext article No AccessForeclosure of Railroad Markets: A Test of Chicago Leverage TheoryCurtis M. Grimm, Clifford Winston, and Carol A. EvansCurtis M. Grimm Search for more articles by this author , Clifford Winston Search for more articles by this author , and Carol A. Evans Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The Journal of Law and Economics Volume 35, Number 2Oct., 1992 Sponsored by The University of Chicago Booth School of Business and The University of Chicago Law School Article DOIhttps://doi.org/10.1086/467255 Views: 17Total views on this site Citations: 33Citations are reported from Crossref Copyright 1992 The University of ChicagoPDF download Crossref reports the following articles citing this article:Wesley W. Wilson and Frank A. Wolak Price Benchmark Regulation of Multiproduct Firms: An Application to the Rail Industry, The Journal of Law and Economics 65, no.S1S1 (May 2022): S155–S190.https://doi.org/10.1086/719445Marissa Beck, Fiona Scott Morton Evaluating the Evidence on Vertical Mergers, Review of Industrial Organization 59, no.22 (Aug 2021): 273–302.https://doi.org/10.1007/s11151-021-09832-zClifford Winston Back To The Good—or Were They the Bad—Old Days of Antitrust? A Review Essay of Jonathan B. Baker’s The Antitrust Paradigm: Restoring a Competitive Economy, Journal of Economic Literature 59, no.11 (Mar 2021): 265–284.https://doi.org/10.1257/jel.20191619Marissa Beck, Fiona M. Scott Morton Evaluating the Evidence on Vertical Mergers, SSRN Electronic Journal 14 (Jan 2020).https://doi.org/10.2139/ssrn.3554073Ken Kikkawa, Glenn Magerman, Emmanuel Dhyne Imperfect Competition in Firm-to-Firm Trade, SSRN Electronic Journal (Jan 2019).https://doi.org/10.2139/ssrn.3389836Curtis M. Grimm, Russell Pittman Policy in the deregulated and newly competitive railroad industry: a global analysis, (Jan 2018): 105–127.https://doi.org/10.1016/B978-0-12-812620-2.00005-5José A. Gómez-Ibáñez Open Access to Infrastructure Networks: The Experience of Railroads, Review of Industrial Organization 49, no.22 (Jun 2016): 311–345.https://doi.org/10.1007/s11151-016-9527-yMatthew Schwieterman, Jason Miller Factor Market Rivalry: Toward an Integrated Understanding of Firm Action, Transportation Journal 55, no.22 (Apr 2016): 97–123.https://doi.org/10.5325/transportationj.55.2.0097Ali Hortacsu, Chad Syverson Cementing Relationships: Vertical Integration, Foreclosure, Productivity and Prices, SSRN Electronic Journal (Jan 2008).https://doi.org/10.2139/ssrn.1442495 Ali Hortaçsu and Chad Syverson Cementing Relationships: Vertical Integration, Foreclosure, Productivity, and Prices Hortaçsu and Syverson, Journal of Political Economy 115, no.22 (Jul 2015): 250–301.https://doi.org/10.1086/514347Carson W. Bays The Determinants of Tying Litigation, 1961–2001, International Advances in Economic Research 13, no.11 (Dec 2006): 81–96.https://doi.org/10.1007/s11294-006-9063-x John D. 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