IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v70y2003i2p232-253.html
   My bibliography  Save this article

Productivity Growth and Some of Its Determinants in the Deregulated U.S. Railroad Industry

Author

Listed:
  • John D. Bitzan
  • Theodore E. Keeler

Abstract

This study analyzes the effects of an important postderegulation innovation on rail freight productivity: the elimination of cabooses and related crew members. It also analyzes the overall growth of productivity in rail freight between 1983 and 1997 (using a translog rail cost function estimated over a sample of Class I railroads between 1983 and 1997). The results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5‐8% on the typical Class I railroad in 1997, equivalent to an annual cost saving of $2 billion to $3.3 billion for all Class I railroads. Moreover, if Class I railroads had no other technological advances since 1983, their 1997 costs (with 1997 factor prices) would have been 36‐43% higher than they in fact were. Finally, the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997; if anything, it accelerated slightly.

Suggested Citation

  • John D. Bitzan & Theodore E. Keeler, 2003. "Productivity Growth and Some of Its Determinants in the Deregulated U.S. Railroad Industry," Southern Economic Journal, John Wiley & Sons, vol. 70(2), pages 232-253, October.
    • Handle: RePEc:wly:soecon:v:70:y:2003:i:2:p:232-253
    DOI: 10.1002/j.2325-8012.2003.tb00568.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2003.tb00568.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2003.tb00568.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert G. Harris, 1977. "Economies of Traffic Density in the Rail Freight Industry," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 556-564, Autumn.
    2. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(3), pages 249-283.
    3. Ernst Berndt & Ann Friedlaender & Judy Chiang & Christopher Vellturo, 1993. "Cost effects of mergers and deregulation in the U.S. Rail industry," Journal of Productivity Analysis, Springer, vol. 4(1), pages 127-144, June.
    4. Ann F. Friedlaender & Clifford Winston & Kung Wang, 1983. "Costs, Technology, and Productivity in the U.S. Automobile Industry," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 1-20, Spring.
    5. Roger Sherman, 2001. "The Future of Market Regulation," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 782-800, April.
    6. Wilson, Wesley W, 1997. "Cost Savings and Productivity in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 11(1), pages 21-40, January.
    7. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    8. Braeutigam, Ronald R & Daughety, Andrew F & Turnquist, Mark A, 1984. "A Firm Specific Analysis of Economies of Density in the U.S. Railroad Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 33(1), pages 3-20, September.
    9. Keeler, Theodore E, 1974. "Railroad Costs, Returns to Scale, and Excess Capacity," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 201-208, May.
    10. Spencer, David E & Berk, Kenneth N, 1981. "A Limited Information Specification Test [Specification Tests in Econometrics]," Econometrica, Econometric Society, vol. 49(4), pages 1079-1085, June.
    11. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-481, August.
    12. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
    13. Keeler, Theodore E, 1971. "The Economics of Passenger Trains," The Journal of Business, University of Chicago Press, vol. 44(2), pages 148-174, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdullah Al-Hadi, Azrina & Peoples, James, 2016. "Input Price Effect on Productivity Gains in the United States Railroad Industry," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 50(2), pages 3-14.
    2. Ndembe, Elvis & Bitzan, John D., 2022. "A shadow price approach examining service quality in a heavily captive U.S. freight transportation market: The case of grain transport," Transport Policy, Elsevier, vol. 116(C), pages 1-10.
    3. Zong, Yueqi & Wu, Jianhong & Yu, Kemei & Yang, Xutao, 2023. "Efficiency benchmarking and its determinants in high-speed railways: Reference for China," Research in Transportation Economics, Elsevier, vol. 102(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Waters II, William G., 2007. "Evolution of Railroad Economics," Research in Transportation Economics, Elsevier, vol. 20(1), pages 11-67, January.
    2. Bitzan, John D. & Karanki, Fecri, 2022. "Costs, density economies, and differential pricing in the U.S. railroad industry," Transport Policy, Elsevier, vol. 119(C), pages 67-77.
    3. John Bitzan & Wesley Wilson, 2007. "Industry costs and consolidation: efficiency gains and mergers in the U.S. railroad industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(2), pages 81-105, March.
    4. Bitzan, John D & Keeler, Theodore E, 2007. "Economies of Density and Regulatory Change in the U.S. Railroad Freight Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(1), pages 157-179, February.
    5. Siew Hoon Lim & C.A. Knox Lovell, 2009. "Profit and productivity of US Class I railroads," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 423-442.
    6. Bitzan, John D., 1997. "Railroad Cost Considerations and the Benefits/Costs of Mergers," MPC Reports 231799, North Dakota State University, Upper Great Plains Transportation Institute.
    7. Rinki Sarkar, 1998. "Economic Characteristics Of The Urban Bus Transit Industry- A Comparative Analysis Of Three Regulated Metropolitan Bus Corporations In India," Working papers 54, Centre for Development Economics, Delhi School of Economics.
    8. Zakharenko, Roman & Luttmann, Alexander, 2023. "Downsizing the jet: A forecast of economic effects of increased automation in aviation," Transportation Research Part B: Methodological, Elsevier, vol. 170(C), pages 25-47.
    9. Yu, Kemei & Wu, Jianhong & Wang, Kun & Zhang, Anming & Zheng, Shiyuan & Wang, Yixiao & Li, Hongchang, 2023. "Restructuring Chinese railways from a cost-efficient perspective—A hedonic cost function analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 177(C).
    10. Bitzan, John, 2000. "Railroad Cost Conditions: Implications for Policy," UGPTI Department Publication 231804, North Dakota State University, Upper Great Plains Transportation Institute.
    11. Müller, Gernot, 2006. "Zur Ökonomie von Trassenpreissystemen," WIK Discussion Papers 279, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    12. Andreas Andrikopoulos & John Loizides, 1998. "Cost structure and productivity growth in European railway systems," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1625-1639.
    13. Bitzan, John D. & Wilson, Wesley W., 2007. "A Hedonic Cost Function Approach to Estimating Railroad Costs," Research in Transportation Economics, Elsevier, vol. 20(1), pages 69-95, January.
    14. Singh, Sanjay K., 2014. "An inquiry into the cost structure of state transport undertakings in India," Transport Policy, Elsevier, vol. 32(C), pages 1-8.
    15. Wilson, Wesley W. & Wilson, William W., 2001. "Deregulation, rate incentives, and efficiency in the railroad market," Research in Transportation Economics, Elsevier, vol. 6(1), pages 1-24, January.
    16. Wilson, Wesley W. & Wilson, William W., 1998. "Deregulation And Innovation In Railroad Shipping Of Agricultural Commodities: 1972-1995," AE Series 23090, North Dakota State University, Department of Agribusiness and Applied Economics.
    17. Doko Tchatoka, Firmin Sabro, 2012. "Specification Tests with Weak and Invalid Instruments," MPRA Paper 40185, University Library of Munich, Germany.
    18. Marvin E. Dodson & Thomas A. Garrett, 2004. "Inefficient Education Spending in Public School Districts: A Case for Consolidation?," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 270-280, April.
    19. Doko Tchatoka, Firmin & Dufour, Jean-Marie, 2020. "Exogeneity tests, incomplete models, weak identification and non-Gaussian distributions: Invariance and finite-sample distributional theory," Journal of Econometrics, Elsevier, vol. 218(2), pages 390-418.
    20. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:70:y:2003:i:2:p:232-253. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.