Cost effects of mergers and deregulation in the U.S. Rail industry
We attempt to disentangle the effects of deregulation on rail costs from those directly attributable to mergers and acquisitions, employing a translog variable cost function, based on an unbalanced panel data set of annual observations for major U.S. Class I railroads from 1974 to 1986. We find that both deregulation and mergers contributed significantly to cost savings. However, of the accumulated cost savings achieved by the six major firms involved in mergers postderegulation, we estimate that by 1986 about 91% of the reduction in accumulated costs is due to deregulation, and about 9% is directly due to mergers and acquisitions (which in turn were facilitated by regulatory reforms). Copyright Kluwer Academic Publishers 1993
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Volume (Year): 4 (1993)
Issue (Month): 1 (June)
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- Levin, Richard C & Weinberg, Daniel H, 1979. "Alternatives for Restructuring the Railroads: End-to-End or Parallel Mergers?," Economic Inquiry, Western Economic Association International, vol. 17(3), pages 371-388, July.
- Ann F. Friedlaender & Ernst R. Berndt & Judy Shaw-Er Wang Chiang & Mark Showalter & Christopher A. Vellturo, 1991. "Rail Costs and Capital Adjustments in a Quasi-Regulated Environment," NBER Working Papers 3841, National Bureau of Economic Research, Inc.