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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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    Cited by:

    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. David E. Davis & Wesley W. Wilson, 2003. "Wages in Rail Markets: Deregulation, Mergers, and Changing Networks Characteristics," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 865-885, April.
    3. William Wilson & Prithviraj Lakkakula, 2021. "Secondary rail car markets for grain transportation and basis values," Agribusiness, John Wiley & Sons, Ltd., vol. 37(3), pages 472-488, July.
    4. 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.
    5. Devin Serfas & Richard Gray & Peter Slade, 2018. "Congestion and Distribution of Rents in Wheat Export Sector: A Canada–U.S. Cross†Border Comparison," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 187-207, June.
    6. Wilson William W. & Dahl Bruce L., 2005. "Railcar Auctions for Grain Shipments: A Strategic Analysis," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(2), pages 1-29, April.
    7. 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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