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Deregulation, Mergers, and Cost Savings in Class I U.S. Railroads, 1974-86

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  • Vellturo, Christopher A, et al

Abstract

In this paper we attempt to disentangle the effects of deregulation on rail costs from those directly attributable to mergers. We estimate that cost reductions obtained from mergers ranged from a high of 33 percent for the Burlington Northern to a low of a 3 percent cost increase for the CSX. However, firms not engaged in significant merger activities experienced similar cost differentials indicating that consolidation was not a prerequisite for cost savings. We conclude that although mergers did confer some benefits on the participating firms, they were not a prerequisite for railroads being able to achieve substantial cost savings. Coauthors are Ernst R. Berndt, Ann F. Friedlaender, Judy Shaw-Er Wang Chiang, and Mark H. Showalter. Copyright 1992 by MIT Press.

Suggested Citation

  • Vellturo, Christopher A, et al, 1992. "Deregulation, Mergers, and Cost Savings in Class I U.S. Railroads, 1974-86," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 339-369, Summer.
    • Handle: RePEc:bla:jemstr:v:1:y:1992:i:2:p:339-69
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    Cited by:

    1. Brito, Duarte & Pereira, Pedro & Ramalho, Joaquim J.S., 2013. "Mergers, coordinated effects and efficiency in the Portuguese non-life insurance industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 554-568.
    2. Wesley W. Wilson & Frank A. Wolak, 2018. "Benchmark Regulation of Multiproduct Firms: An Application to the Rail Industry," NBER Working Papers 25268, National Bureau of Economic Research, Inc.
    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. 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.
    5. 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.
    6. Andrade Furtado, Francisco Manuel Bastos, 2013. "U.S. and European Freight Railways: The Differences That Matter," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 52(2).

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