Skip to main content
SpringerLink
Log in

Railroad Deregulation and Consumer Welfare

  • Published:
Journal of Regulatory Economics Aims and scope Submit manuscript

Abstract

Railroad deregulation under the Staggers Act of 1980 generated rate reductions, service enhancements, and other improvements in economic welfare. These benefits appear to be widely shared. There is a low likelihood that some captive shippers pay rates that exceed the rates they would have paid under regulation, some evidence that some captive shippers have paid rates that regulators would judge “unreasonable,” and strong evidence that captive shippers pay higher rates than non-captive shippers. The source of deregulation’s benefits is as noteworthy as their size and distribution. The principal benefits of railroad deregulation stem from cost reduction, not just a closer alignment of prices with pre-deregulation cost levels.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Association of American Railroads. 1998. Various statistics available at www.aar.org.

  • Banks, R. L., and Fieldston. 1998. “Rail Freight Rates in the Post-Staggers Era.” (April).

  • Barnekov, C. C., and A. Kleit. 1990. “The Efficiency Effects of Railroad Deregulation in the United States.” International Journal of Transport Economics 17: 21-36.

    Google Scholar 

  • Belzer, M. H. 1995. “Collective Bargaining After Deregulation: Do the Teamsters Still Count?” Industrial and Labor Relations Review 48(July): 636-655.

    Google Scholar 

  • Berndt, E. R., A. F. Friedlaender, J. S. W. Chiang, and C. A. Vellturo. 1993. “Costs Effects of Mergers and Deregulation in the U.S. Railroad Industry.” Journal of Productivity Analysis 4: 127-144.

    Google Scholar 

  • Bork, R. H. 1978. The Antitrust Paradox. New York, USA: Basic Books.

    Google Scholar 

  • Boyer, K. D. 1987. “The Cost of Price Regulation: Lessons from Railroad Deregulation.” Rand Journal of Economics 18: 408-416.

    Google Scholar 

  • Burton, M. L. 1993. “Railroad Deregulation, Carrier Behavior, and Shipper Response: A Disaggregated Analysis.” Journal of Regulatory Economics 5: 417-434.

    Google Scholar 

  • Costello, K. W. 1998. “Advisory Paper to the Advocacy Team, Georgia Public Service Commission, on Alternative Forms of Regulation.” National Regulatory Research Institute (May 1).

  • Costello, K. W. 1997. “A Real-Life PBR Plan for an Electric Utility: The Case of Central Maine Power.” Presentation at New Mexico State University (May 22).

  • Dennis, S. M. 2001. “Changes in Railroad Rates Since the Staggers Act.” Transportation Research, Part E (March): 55-69.

  • Ellig, J. 2001. Dynamic Competition and Public Policy: Technology, Innovation, and Antitrust Issues. Cambridge, U.K: Cambridge University Press.

    Google Scholar 

  • Ellig, J. 1996. “Intrastate Pipeline Regulation: Lessons from the Texas Experience.” in Jerry Ellig and Joseph Kalt (Eds.), New Horizons in Natural Gas Deregulation. Westport, CT: Praeger.

    Google Scholar 

  • Ellig, J., and M. Giberson. “Scale, Scope, and Regulation in the Texas Gas Transmission Industry.” Journal of Regulatory Economics (March): 79-90.

  • Faulhaber, G. R. 1975. “Cross-Subsidization: Pricing in Public Enterprises.” American Economic Review 65(December): 966-977.

    Google Scholar 

  • Friedlaender, A. F. 1992. “Coal Rates and Revenue Adequacy in a Quasi-Regulated Rail Industry.” Rand Journal of Economics 23: 376-394.

    Google Scholar 

  • Friedlaender, A. F. 1969. The Dilemma of Freight Transport Regulation. Washington: Brookings.

    Google Scholar 

  • Gellman, A. 1971. “Surface Freight Transportation.” in W. M. Capron (Ed.), Technological Change in Regulated Industries. Washington: Brookings.

    Google Scholar 

  • Grimm, C. M., and K. G. Smith. 1987. “The Impact of Rail Regulatory Reform on Rates, Service Quality, and Management Performance: A Shipper Perspective.” Logistics and Transportation Review 22: 57-68.

    Google Scholar 

  • Grimm, C. M., and C. Winston. 2000. “Competition in the Deregulated Railroad Industry: Sources, Effects, and Policy Issues.” In S. Peltzman and C. Winston (Eds.), Deregulation of Network Industries: What's Next? Washington: Brookings, 41-72.

    Google Scholar 

  • Grimm, C. M., C. Winston, and C. A. Evans. 1992. “Foreclosure of Railroad Markets: A Test of Chicago Leverage Theory.” Journal of Law & Economics 35(October): 295-310.

    Google Scholar 

  • Hendricks, W. 1994. “Deregulation and Labor Earnings.” Journal of Labor Research 15(Summer): 207-234.

    Google Scholar 

  • Hirsch, B. T. 1993. “Trucking Deregulation and Labor Earnings: Is the Union Premium a Compensating Differential?” Journal of Labor Economics 11: 279-301.

    Google Scholar 

  • Hunt, S. D. 2000. A General Theory of Competition. Thousand Oaks, CA: SAGE.

    Google Scholar 

  • Keeler, T. E. 1983. Railroads, Freight, and Public Policy. Washington: Brookings.

    Google Scholar 

  • Kirzner, I. 1973. Competition and Entrepreneurship. University of Chicago Press.

  • Knight, F. H. 1933. The Economic Organization. University of Chicago Press.

  • Lee, T., and C. P. Baumel. 1987. “The Cost Structure of the U.S. Railroad Industry Under Deregulation.” Journal of the Transportation Research Forum 28: 245-253.

    Google Scholar 

  • Lee, T., C. P. Baumel, and P. Harris. 1987. “Market Structure, Conduct, and Performance of the Class I Railroad Industry, 1971–1984.” Transportation Journal 27(Summer): 54-66.

    Google Scholar 

  • Leibenstein, H. 1966. “Allocative Efficiency versus X-Efficiency.” American Economic Review 77: 168-185.

    Google Scholar 

  • Levin, R. C. 1981. “Railroad Rates, Profitability, and Welfare Under Deregulation.” Bell Journal of Economics 12(Spring): 1-26.

    Google Scholar 

  • Levin, R. C. 1978. “Allocation in Surface Freight Transportation: Does Rate Regulation Matter?” Bell Journal of Economics 9: 18-45.

    Google Scholar 

  • MacAvoy, P. W., and J. Sloss. 1967. Regulation of Transport Innovation: The ICC and Unit Coal Trains to the East. New York: Random House.

    Google Scholar 

  • MacDonald, J. M. 1989. “Railroad Deregulation, Innovation, and Competition: Effects of the Staggers Rail Act on Grain Transportation.” Journal of Law & Economics 32: 63-96.

    Google Scholar 

  • MacDonald, J. M. 1996. “Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor.” Industrial and Labor Relations Review 50(October): 80-91.

  • McFarland, H. 1989. “The Effects of United States Railroad Deregulation on Shippers, Labor, and Capital.” Journal of Regulatory Economics 1: 259-270.

    Google Scholar 

  • Moore, T. G. 1975. “Deregulating Surface Freight Transportation.” In Almarin Phillips (Ed.), Promoting Competition in Regulated Industries. Washington: Brookings.

    Google Scholar 

  • Morrison, Steven, and Clifford Winston. 1995. The Evolution of the Airline Industry. Washington: Brookings.

    Google Scholar 

  • National Regulatory Research Institute. Undated. List of state telecommunications price cap plans.

  • Schumpeter, J. 1942. Capitalism, Socialism, and Democracy. New York: Harper & Row.

    Google Scholar 

  • Sorenson, L. O. 1984. “Some Impacts of Rail Regulatory Changes on Grain Industries.” American Journal of Agricultural Economics 66(5)(December): 645-650.

    Google Scholar 

  • United States Department of Transportation. 1978. A Prospectus for Change in the Freight Railroad Industry (October).

  • United States General Accounting Office. 1999a. Railroad Regulation: Changes in Railroad Rates and Service Quality Since 1990 (April).

  • United States General Accounting Office. 1999b. Railroad Regulation: Current Issues Associated with the Rate Relief Process (February).

  • United States General Accounting Office. 1991. Railroad Competitiveness: Federal Laws and Policies Affect Railroad Competitiveness (November).

  • United States General Accounting Office. 1990. Railroad Regulation: Economic and Financial Impacts of the Staggers Rail Act of 1980 (May).

  • Wilson, W. W. 1997. “Cost Savings and Productivity in the Railroad Industry.” Journal of Regulatory Economics 11: 21-40.

    Google Scholar 

  • Wilson, W. W. 1994. “Market-Specific Effects of Rail Deregulation.” Journal of Industrial Economics 42: 1-22.

    Google Scholar 

  • Winston, C. 1998. “U.S. Industry Adjustment to Economic Deregulation.” Journal of Economic Perspectives 12:3(Summer), 89-110.

    Google Scholar 

  • Winston, C. 1993. “Economic Deregulation: Day of Reckoning for Microeconomists.” Journal of Economic Literature 31 (September): 1263-1289.

    Google Scholar 

  • Winston, C. 1985. “Conceptual Developments in the Economics of Transportation: An Interpretive Survey.” Journal of Economic Literature 23(March): 57-94.

    Google Scholar 

  • Winston, C., T. M. Corsi, C. M. Grimm, and C. A. Evans. 1990. The Economic Effects of Surface Freight Deregulation. Washington, DC: Brookings.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Mercatus Center and Institute for Humane Studies, George Mason University, 3401 North Fairfax Dr., Suite 450, Arlington, VA, 22201

    Jerry Ellig

Authors
  1. Jerry Ellig
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Ellig, J. Railroad Deregulation and Consumer Welfare. Journal of Regulatory Economics 21, 143–167 (2002). https://doi.org/10.1023/A:1014331206366

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1014331206366

Keywords

Search

Navigation