Industry Costs and Consolidation: Efficiency Gains and Mergers in the Railroad Industry

Wesley Wilson and John Bitzan

No 231700, MPC Reports from North Dakota State University, Upper Great Plains Transportation Institute

Abstract: Partial deregulation of the railroad industry substantially eased regulatory impediments to consolidation. Since partial deregulation, there has been a massive consolidation of firms in the railroad industry, which has been premised on efficiency gams, network rationalization, and service quality. In this paper, we focus on efficiency gains. We develop and estimate a model of costs that allows for the estimation of merger specific cost savings as well as industry cost savings. The results suggest that early mergers gave very small effects, but recent "mega" mergers have given very large effects. Our central result is that consolidation in the railroad industry from 1983-1997 accounts for about a 17 percent reduction in industry costs.

Keywords: Agribusiness; Industrial Organization; Land Economics/Use (search for similar items in EconPapers)
Pages: 56
Date: 2003-06
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Industry costs and consolidation: efficiency gains and mergers in the U.S. railroad industry (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ndtimr:231700

DOI: 10.22004/ag.econ.231700

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