Productivity Growth and Some of Its Determinants in the Deregulated U.S. Railroad Industry

John D. Bitzan and Theodore E. Keeler

Southern Economic Journal, 2003, vol. 70, issue 2, 232-253

Abstract: This study analyzes the effects of an important postderegulation innovation on rail freight productivity: the elimination of cabooses and related crew members. It also analyzes the overall growth of productivity in rail freight between 1983 and 1997 (using a translog rail cost function estimated over a sample of Class I railroads between 1983 and 1997). The results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5‐8% on the typical Class I railroad in 1997, equivalent to an annual cost saving of $2 billion to $3.3 billion for all Class I railroads. Moreover, if Class I railroads had no other technological advances since 1983, their 1997 costs (with 1997 factor prices) would have been 36‐43% higher than they in fact were. Finally, the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997; if anything, it accelerated slightly.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:70:y:2003:i:2:p:232-253

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