Modernizing U.S. Freight Rail Regulation

Schmalensee, Richard; Wilson, Wesley W.

doi:10.1007/s11151-016-9515-2

Cited by 6 publications

(5 citation statements)

References 27 publications

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“…Schmalensee and Wilson (2016) compared various productivity ratios in 10-year increments, such as average railroad ton-miles, average network size, average length of haul, and ton-miles per train-hour. They presented that all productivity ratios had an increasing trend.…”

Section: Literature Reviewmentioning

confidence: 99%

A re-examination of four decades’ deregulation effect on competition and productivity of the US freight rail transportation industry

Shin

2024

JILT

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PurposeThe purpose of this study is to compare the competition and productivity of the US freight rail transportation industry for the past 41 years (1980 ∼ 2020), which consists of the two periods, before and after the abolishment of the Interstate Commerce Commission (ICC) in 1995.Design/methodology/approachThis study investigates any relationships between the market concentration index values and labor productivity values in the separate two periods, and how the existence of a regulatory body in the freight transportation market impacted the productivity of the freight rail transportation industry by using a Cobb–Douglas production function on annual financial statement data from the US stock exchange market.FindingsThis study found that, after the abolishment of the ICC: (1) the rail industry became less competitive, (2) even if the rail industry had an increasing labor productivity trend, there was a strong negative correlation between the market concentration index and labor productivity and (3) the rail industry’s total factor productivity was decreased.Originality/valueThis study is to find empirical evidence of the effect of the ICC abolishment on the competition and productivity levels in the US freight rail transportation industry using a continuous data set of 41-year financial statements, which is unique compared to previous studies.

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Section: Literature Reviewmentioning

confidence: 99%

A re-examination of four decades’ deregulation effect on competition and productivity of the US freight rail transportation industry

Shin

2024

JILT

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“…Until 1980, prices and operations of U.S. railways were regulated through the Interstate Commerce Act of 1887 (Transportation Research Board ). Provisions of this act, and other acts to follow, regulated entry and exit, mergers, and pricing (Schmalensee and Wilson ). The acts included “common carrier” provisions that required railways to provide service to any shipper upon reasonable request, and prohibited contracting and price discrimination over distance (Basedow ; Spychalski ).…”

Section: Grain Transportation In the United Statesmentioning

confidence: 99%

“…The acts included “common carrier” provisions that required railways to provide service to any shipper upon reasonable request, and prohibited contracting and price discrimination over distance (Basedow ; Spychalski ). This regulatory environment made it difficult for railways to respond to changing market conditions, which had worsened as competition from trucking intensified with technological change and the development of the interstate highway network (Schmalensee and Wilson ). Railways became increasingly unprofitable and government transfers were required to allow railways to continue operating (Mac Donald ; Wilson ).…”

Section: Grain Transportation In the United Statesmentioning

confidence: 99%

“…These changes had a dramatic impact on rail efficiency: between 1975 and 2000, the number of Class 1 railways decreased from 67 to 9, route distance decreased by 48%, and tons moved per train hour increased by 58%. While freight rates dropped by 58%, rail cost fell even more precipitously, and railroads became profitable (Schmalensee and Wilson ).…”

Section: Grain Transportation In the United Statesmentioning

confidence: 99%

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Congestion and Distribution of Rents in Wheat Export Sector: A Canada–U.S. Cross‐Border Comparison

Serfas

Gray

Slade

2018

Canadian J Agri Economics

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In Canada, average grain freight rates are regulated via the Maximum Revenue Entitlement (MRE), while on the US side of the border grain rates are subject to very little oversight. We use this natural experiment to explore how the MRE regulation has impacted freight rates and the distribution of rents in the wheat supply chain since 2012. On both sides of the border, when large crops have exceeded the short‐term capacity of grain export channels to move the crop, export basis has increased and reduced producer prices. In locations not subject to barge competition, US grain freight rates are higher than Canadian rates and are bid up further during periods of congestion. In Canada, MRE regulation redistributes rents away from railways toward grain companies and producers. These higher grain handling margins have increased the incentives to build additional port terminal capacity in the post‐CWB single desk environment. Au Canada, les tarifs marchandises moyens des céréales sont règlementés par le Revenu admissible maximal (RAM), tandis qu'aux États‐Unis, les tarifs céréaliers font l'objet de très peu de suivi. Au moyen de cette expérience naturelle, nous explorons l'impact du RAM sur les tarifs marchandises et sur la distribution des rentes dans la chaine d'approvisionnement du blé depuis 2012. Des deux côtés de la frontière, lorsque de vastes cultures ont excédé la capacité à court terme des voies d'exportation céréalières pour distribuer leurs récoltes, le seuil d'exportation augmente et réduit les prix des producteurs. Là où ils ne sont pas assujettis à la compétition de barges, les tarifs marchandises céréaliers américains s'avèrent plus élevés que les tarifs canadiens et se voient encore surenchéris lors de période de congestion. Au Canada, la règlementation du RAM redirige les rentes des compagnies ferroviaires aux entreprises et producteurs céréaliers. Ces marges de manutention plus élevées ont augmenté les incitatifs pour accroître la capacité des ports‐terminaux dans un environnement à pupitre unique, post Commission canadienne du blé.

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“…If rates exceed 180% of average variable cost and a firm is found to have market dominance, the STB will determine if a rate is reasonable based on a “stand‐alone cost” test or other criterion. A relatively small share of disputed rates are found by STB to be unreasonable (Schmalensee and Wilson ).…”

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confidence: 99%

Who (Else) Benefits From Electricity Deregulation? Coal Prices, Natural Gas, and Price Discrimination

Hughes

Lange

2020

Economic Inquiry

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Deregulation of major industries over the past 40 years has produced large efficiency gains. However, distributional effects have been more difficult to assess. In the electricity sector, deregulation has vastly increased information available to market participants through the formation of wholesale markets. We test whether upstream suppliers, specifically railroads that transport coal from mines to power plants, use this information to capture economic rents that would otherwise accrue to electricity generators. We find railroads charge higher markups when rents are larger. This effect is larger for deregulated plants, highlighting an important distributional impact of deregulation. (JEL L11, L51, Q48) * We thank Matthew Butner, Harrison Fell, Dan Kaffine, Pete Maniloff, attendees of the 2016 AERE summer conference, Front Range Energy Camp, the EI@Haas summer conference, the editor, and three anonymous referees for helpful comments and suggestions.

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Modernizing U.S. Freight Rail Regulation

Cited by 6 publications

References 27 publications

A re-examination of four decades’ deregulation effect on competition and productivity of the US freight rail transportation industry

A re-examination of four decades’ deregulation effect on competition and productivity of the US freight rail transportation industry

Congestion and Distribution of Rents in Wheat Export Sector: A Canada–U.S. Cross‐Border Comparison

Who (Else) Benefits From Electricity Deregulation? Coal Prices, Natural Gas, and Price Discrimination

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