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A Cost-Benefit Analysis of the Privatization of Canadian National Railway

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  • Anthony E. Boardman
  • Claude Laurin
  • Mark A. Moore
  • Aidan R. Vining

Abstract

This article uses cost-benefit analysis to estimate the welfare gains from the privatization of Canadian National Railway (CN) in November 1995, one of the largest rail privatizations in history. It also shows how these gains have been distributed among consumers, producers, and government, and between Canadians and non-Canadians. The article uses the costs of Canadian Pacific Railway to create a more credible comparison than in previous privatization studies. Based on a conservative counterfactual, we estimate that CN's privatization generated welfare gains of at least $4 billion (in 1992 dollars). However, the welfare gain was possibly as high as $15 billion. The Canadian government captured almost half of these gains, while CN shareholders captured most of the rest.

Suggested Citation

  • Anthony E. Boardman & Claude Laurin & Mark A. Moore & Aidan R. Vining, 2009. "A Cost-Benefit Analysis of the Privatization of Canadian National Railway," Canadian Public Policy, University of Toronto Press, vol. 35(1), pages 59-83, March.
    • Handle: RePEc:cpp:issued:v:35:y:2009:i:1:p:59-83
    DOI: 10.3138/cpp.35.1.59
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    References listed on IDEAS

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    1. Claude Laurin & Anthony E. Boardman & Aidan R. Vining, 2004. "Government Underpricing of Share‐Issue Privatizations," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(3), pages 399-429, September.
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    Cited by:

    1. Preston, John & Robins, Dawn, 2013. "Evaluating the long term impacts of transport policy: The case of passenger rail privatisation," Research in Transportation Economics, Elsevier, vol. 39(1), pages 14-20.
    2. Wolf, C. & Pollitt, M.G., 2009. "The Welfare Implications of Oil Privatisation: A Cost-Benefit Analysis of Norway’s Statoil," Cambridge Working Papers in Economics 0912, Faculty of Economics, University of Cambridge.
    3. Matthew Calver & Fanny McKellips, 2016. "Productivity Trends in the Canadian Transport Sector: An Overview," CSLS Research Reports 2016-04, Centre for the Study of Living Standards.
    4. Dianshuang Wang & Xiaochun Li, 2020. "Privatization in Vertically Related Markets: Insights from a General Equilibrium Approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 234(3), pages 3-21, September.
    5. Patrick Mabuza, 2019. "Is the Public Private Partnership Model the Right Vehicle for Public Infrastructure Delivery in Developing Countries?," Journal of Economics and Behavioral Studies, AMH International, vol. 11(1), pages 211-222.
    6. Boardman, Anthony E. & Vining, Aidan R. & Weimer, David L., 2016. "The long-run effects of privatization on productivity: Evidence from Canada," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1001-1017.
    7. Le, Hoang Cuong & Cabalu, Helen & Salim, Ruhul, 2014. "Winners and losers in Vietnam equitisation programs," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 172-184.
    8. Anthony E. Boardman & Aidan R. Vining, 2010. "Assessing the Economic Worth of Public–Private Partnerships," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 8, Edward Elgar Publishing.

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