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Rail Costs and Capital Adjustments in a Quasi-Regulated Environment

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  • Ann F. Friedlaender
  • Ernst R. Berndt
  • Judy Shaw-Er Wang Chiang
  • Mark Showalter
  • Christopher A. Vellturo

Abstract

This paper reports on results obtained from the estimation of a rail cost function using a pooled-time series, cross section of Class I railroads for the period 1974-1986. An analysis is performed of short-run and long-run returns to scale, the extent of capital disequilibrium, and adjustments to way and structures capital in the heavily regulated and quasi-regulated environments before and after the passage of the Staggers Act in 1980. In general, it is found that there is considerable overcapitalization in the rail industry and that this has persisted in spite of the regulatory freedom provided by the Staggers Act.

Suggested Citation

  • Ann F. Friedlaender & Ernst R. Berndt & Judy Shaw-Er Wang Chiang & Mark Showalter & Christopher A. Vellturo, 1991. "Rail Costs and Capital Adjustments in a Quasi-Regulated Environment," NBER Working Papers 3841, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3841
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    References listed on IDEAS

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    1. Friedlaender, A.F., 1991. "Fair Rates and Rates of Return in a deregulated Rail Industry," Working papers 576, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Wang Chiang, Judy S & Friedlaender, Ann F, 1985. "Truck Technology and Efficient Market Structure," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 250-258, May.
    3. Ernst R. Berndt & Ann F. Friedlaender & Judy Shaw-Er Wang Chiang & Christopher A. Vellturo, 1991. "Mergers, Deregulation and Cost Savings in the U.S. Rail Industry," NBER Working Papers 3749, National Bureau of Economic Research, Inc.
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    1. 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.
    2. Dimitris Christopoulos & John Loizides & Efthymios G. Tsionas, 2001. "Efficiency in European railways: Not as inefficient as one might think," Journal of Applied Economics, Universidad del CEMA, vol. 4, pages 63-88, May.
    3. Blomberg, Jerry & Söderholm, Patrik, 2011. "Factor demand flexibility in the primary aluminium industry: Evidence from stagnating and expanding regions," Resources Policy, Elsevier, vol. 36(3), pages 238-248, September.
    4. Soderholm, Patrik, 2001. "Fossil fuel flexibility in west European power generation and the impact of system load factors," Energy Economics, Elsevier, vol. 23(1), pages 77-97, January.
    5. Pettersson, Fredrik & Söderholm, Patrik & Lundmark, Robert, 2012. "Fuel switching and climate and energy policies in the European power generation sector: A generalized Leontief model," Energy Economics, Elsevier, vol. 34(4), pages 1064-1073.
    6. Centre for the Study of Living Standards, 2012. "The Impact of Information and Communication Technology on the Productivity of the Canadian Transportation System: A Macroeconomic Approach for the Air and Rail Sectors," CSLS Research Reports 2012-07, Centre for the Study of Living Standards.
    7. 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.
    8. Pedro Cantos & José Pastor & Lorenzo Serrano, 1999. "Productivity, efficiency and technical change in the European railways: A non-parametric approach," Transportation, Springer, vol. 26(4), pages 337-357, November.
    9. José Manuel Pastor Monsálvez & Lorenzo Serrano Martínez & Pedro Cantos, 2002. "Cost And Revenue Inefficiencies In The European Railways," Working Papers. Serie EC 2002-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Coublucq, Daniel, 2013. "Econometric analysis of productivity with measurement error: Empirical application to the US Railroad industry," DICE Discussion Papers 95, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    11. Coublucq, Daniel, 2013. "Demand estimation with selection bias: A dynamic game approach with an application to the US railroad industry," DICE Discussion Papers 94, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    12. 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).
    13. Gaynor, Martin & Anderson, Gerard F., 1995. "Uncertain demand, the structure of hospital costs, and the cost of empty hospital beds," Journal of Health Economics, Elsevier, vol. 14(3), pages 291-317, August.
    14. Luisa Affuso & Alvaro Angeriz & Michael Pollitt, 2009. "The Impact of Privatisation on the Efficiency of Train Operation in Britain," Working Papers 28, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    15. Soderholm, Patrik, 2000. "Fuel flexibility in the West European power sector," Resources Policy, Elsevier, vol. 26(3), pages 157-170, September.

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