Short-run Total Cost Change and Productivity of US Class I Railroads
This paper examines how productivity changes contribute to short-run cost variations over time and across railroads. Using an unbalanced panel of US Class I railroad data for the period 1996-2003, decomposition models were used to attribute intertemporal and multilateral cost variations to their causal factors. We find that (i) railroads were able to reduce their physical capitals in recent years; (ii) railroads experienced technical progress over time, but they were technically and allocatively inefficient in some time periods; and (iii) the benchmarking railroads could learn from the low-cost and cost-efficient benchmark when it comes to cost savings. © 2008 LSE and the University of Bath
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