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Rail Competition Changes Since the Staggers Act

Author

Listed:
  • Prater, Marvin E.
  • Casavant, Ken
  • Jessup, Eric
  • Blanton, Bruce
  • Bahizi, Pierre
  • Nibarger, Daniel
  • Weingram, Isaac

Abstract

Agricultural and other shippers are concerned about the sufficiency in rural areas of transportation capacity, the sufficiency of competition in the transportation system, the reliability of transportation services, and the reasonableness of rates. This paper examines the sufficiency of rail freight competition and the effects of intramodal competition on rail rates. The paper begins with a review of the importance of rail transportation for U.S. agricultural producers. Specific attention is paid to the nature of competition faced by railroads, especially since deregulation, using the analytical tool of inverse Herfindahl-Hirschman Indices (HHI), by USDA Crop Reporting Districts (CRD). As shown by the inverse HHIs, the overall level of rail competition for grains and oilseeds has generally decreased since the 1985-1992 period, even though rail competition has increased for some CRDs. In addition, revenue to variable cost ratios (R/VC) increased in most of the CRDs analyzed, and the analysis found them related to the number of railroads competing in the CRD. Competition is then analyzed relative to the revenue per ton, revenue per ton-mile, and the revenue to variable cost ratios (R/VC) associated with the level of competition for six states with the least rail-to-rail competition, and distant from water transportation, with those for four states having more rail-to-rail competition and close proximity to water transportation.

Suggested Citation

  • Prater, Marvin E. & Casavant, Ken & Jessup, Eric & Blanton, Bruce & Bahizi, Pierre & Nibarger, Daniel & Weingram, Isaac, 2010. "Rail Competition Changes Since the Staggers Act," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 49(3).
    • Handle: RePEc:ags:ndjtrf:207198
    DOI: 10.22004/ag.econ.207198
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    References listed on IDEAS

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    1. MacDonald, James M., 1989. "Effects of railroad deregulation on grain transportation," Technical Bulletins 312302, United States Department of Agriculture, Economic Research Service.
    2. MacDonald, James M, 1989. "Railroad Deregulation, Innovation, and Competition: Effects of the Staggers Act on Grain Transportation," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 63-95, April.
    3. Lewis, William W., 2004. "The Power of Productivity," University of Chicago Press Economics Books, University of Chicago Press, number 9780226476766.
    4. James M. MacDonald, 1987. "Competition and Rail Rates for the Shipment of Corn, Soybeans, and Wheat," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 151-163, Spring.
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    1. 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.
    2. Lee Pinkowitz & Rohan Williamson, 2016. "The Staggers Act and Firm Performance: Long-Run Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 161-202, September.
    3. Musa Abdu & Adamu Jibir, 2019. "Sources of Market Power among Firms in Sub-Saharan Africa: Do Institutions Matter in Competitive Policies?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(2), pages 115-148, July-Dec.
    4. Ndembe, Elvis & Bitzan, John, 2018. "Grain freight elevator consolidation, transportation demand, and the growth of shuttle facilities," Research in Transportation Economics, Elsevier, vol. 71(C), pages 54-60.

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