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The Costs of Price Regulation: Lessons from Railroad Deregulation

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  • Kenneth D. Boyer

Abstract

Previous calculations of the costs of railroad rate regulation assumed that deregulation would lower railroad rate levels and allow railroads to capture significant amounts of traffic from other modes of transportation. This article presents empirical results that show that neither of these effects materialized under deregulation. A calculation based on actual price and market share changes places the annual cost of regulation at roughly $90 million, well below previous estimates.

Suggested Citation

  • Kenneth D. Boyer, 1987. "The Costs of Price Regulation: Lessons from Railroad Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 408-416, Autumn.
  • Handle: RePEc:rje:randje:v:18:y:1987:i:autumn:p:408-416
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    Cited by:

    1. Ovtchinnikov, Alexei V., 2013. "Merger waves following industry deregulation," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 51-76.
    2. Vachal, Kimberly & Bitzan, John, 1997. "Implications of a North American Grain Marketing System for Prairie Transportation and Elevators," MPC Reports 231802, North Dakota State University, Upper Great Plains Transportation Institute.
    3. Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    4. Behrens, Kristian & Carl Gaigne & Jacques-Francois Thisse, 2006. "Is the regulation of the transport sector always detrimental to consumers?," CIRJE F-Series CIRJE-F-455, CIRJE, Faculty of Economics, University of Tokyo.
    5. Peoples, James & Talley, Wayne K., 2007. "Earnings Differentials of Railroad Managers and Labor," Research in Transportation Economics, Elsevier, vol. 20(1), pages 259-281, January.
    6. 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.
    7. Wesley W. Wilson & Frank A. Wolak, 2016. "Freight Rail Costing and Regulation: The Uniform Rail Costing System," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 229-261, September.
    8. Hughes, Jonathan E., 2011. "The higher price of cleaner fuels: Market power in the rail transport of fuel ethanol," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 123-139, September.
    9. Vachal, Kimberly & Bitzan, John, 2000. "The Long-Term Availability of Railroads Services for U.S. Agriculture," UGPTI Department Publication 231803, North Dakota State University, Upper Great Plains Transportation Institute.

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