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

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  • 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
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    References listed on IDEAS

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    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.

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