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Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways

Dan Bogart () and Latika Chaudhary

American Economic Journal: Economic Policy, 2012, vol. 4, issue 1, 28-57

Abstract: This paper studies the relationship between operational costs and state ownership in Indian railways between 1874 and 1912. We find the move to state ownership significantly decreased working expenses. The cost declines are not driven by anticipation effects, changes in reporting standards, or long run trends. Rather, the evidence suggests the colonial Government of India reduced operational costs by cutting labor costs. Our surprising results can be explained by the undemocratic colonial nature of the Government of India, a fiscal system heavily reliant on railways for revenues, and a regulatory environment under private ownership that weakened incentives to lower costs. (JEL L32, L51, L92, N45, N75, O18, R41)

JEL-codes: L32 L51 L92 N45 N75 O18 R41 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/pol.4.1.28
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