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Against the Stand-Alone-Cost Test in U.S. Freight Rail Regulation

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  • Russell Pittman

    (Economic Analysis Group, Antitrust Division, U.S. Department of Justice)

Abstract

The stand-alone-cost test has become an expensive, extensive, and time-consuming part of the regulatory practice of the U.S. Surface Transportation Board in the performance of its statutory duty to protect "captive shippers" from monopoly rail rates. Worse, a close examination of the history of its adoption and application suggests only a very tenuous connection with its claimed intellectual foundations, the classic works of Faulhaber (1975) and Baumol, Panzar, and Willig (1982). It is time to retire this tool and replace it with something simpler and more effective and transparent.

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File URL: http://www.justice.gov/atr/public/eag/257888.pdf
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Bibliographic Info

Paper provided by Department of Justice, Antitrust Division in its series EAG Competition Advocacy Papers with number 201001CA.

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Length: 16 pages
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:doj:compad:201001

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Postal: Department of Justice Antitrust Division 450 Fifth Street NW Washington, DC 20530
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Web page: http://www.justice.gov/atr/
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  1. Russell Pittman, 2004. "Russian Railways Reform and the Problem of Non-discriminatory Access to Infrastructure," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 167-192, 06.
  2. Ellig, Jerry, 2002. "Railroad Deregulation and Consumer Welfare," Journal of Regulatory Economics, Springer, vol. 21(2), pages 143-67, March.
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