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Deregulation, rate incentives, and efficiency in the railroad market

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  • Wilson, Wesley W.
  • Wilson, William W.

Abstract

A number of important innovations and events over the last 25 years have reshaped railroad marketing and have led to dramatically lower rates. Many of these innovations have been developed for and used extensively in agricultural markets. In this paper, we document these innovations and examine the behavior of rail rates from 1972-1995, using a nonlinear regulatory adjustment mechanism to represent the effects of partial deregulation. We focus on rate changes that have occurred under the new regulatory regime introduced by passage of the Staggers Rail Act in 1980. Our econometric analysis applies to the five leading agricultural commodities shipped by rail which account for over 90% of agricultural movements. We find that rates for all five commodities have fallen dramatically over time, but that there are differences across the commodities in magnitude. We also find that the effect of partial deregulation on rates and productivity, while large, dissipates over time.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:retrec:v:6:y:2001:i:1:p:1-24
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    References listed on IDEAS

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    1. James M. MacDonald & Linda C. Cavalluzzo, 1996. "Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor," ILR Review, Cornell University, ILR School, vol. 50(1), pages 80-91, October.
    2. Wilson, William W., 1998. "U.S. Grain Handling And Transportation System: Factors Contributing To The Dynamic Changes In The 1980s And 1990s," AE Series 23081, North Dakota State University, Department of Agribusiness and Applied Economics.
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    7. Wilson, Wesley W, 1997. "Cost Savings and Productivity in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 11(1), pages 21-40, January.
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    Cited by:

    1. David E. Davis & Wesley W. Wilson, 2003. "Wages in Rail Markets: Deregulation, Mergers, and Changing Networks Characteristics," Southern Economic Journal, Southern Economic Association, vol. 69(4), pages 865-885, April.
    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.

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