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Railroad Concentration, Market Shares, and Rates

Author

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  • Prater, Marvin
  • Sparger, Adam
  • O'Neil, Daniel Jr.

Abstract

Since the passage of the Staggers Act in 1980, many railroads have merged. The market share of Class I railroads has increased since then, while the number of Class I railroads has fallen to only seven. Through railroad mergers, rail-to-rail competition has been reduced, railroad market power has increased, and rail costs have fallen by over half in real terms. Over much of this period, most of these reduced costs were passed on to shippers as savings through lower rates. Since 2004, however, average rail rates per ton-mile for all commodities have climbed 36 percent, negating some of the savings over the period. Although some of these real rail rate increases have contributed to record rail profitability and capital investment, most of the rate increases are the result of increased railroad costs; real rail costs, adjusted for productivity, increased 29 percent during the same period. Although deregulation of railroads in 1980 produced more than 550 regional and local railroads throughout America, the 7 Class I railroads originated well over half the grain and oilseed shipments in 2011.

Suggested Citation

  • Prater, Marvin & Sparger, Adam & O'Neil, Daniel Jr., 2014. "Railroad Concentration, Market Shares, and Rates," Research Reports 164478, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
  • Handle: RePEc:ags:uamsrr:164478
    DOI: 10.22004/ag.econ.164478
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    Cited by:

    1. Atallah, Shady S. & Gómez, Miguel I. & Björkman, Thomas, 2014. "Localization effects for a fresh vegetable product supply chain: Broccoli in the eastern United States," Food Policy, Elsevier, vol. 49(P1), pages 151-159.
    2. Schotte,Simone Raphaela & Winkler,Hernan Jorge, 2016. "Why are the elderly more averse to immigration when they are more likely to benefit ? evidence across countries," Policy Research Working Paper Series 7554, The World Bank.

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    Keywords

    Agribusiness;

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