Rail Study Questions 'Conventional Wisdom'
Conventional wisdom over the past 20 years has been that competition in freight transportation benefits shippers more than economic regulation, but a new study shows the reverse is true — and it could have widespread effects.
For example, Bitzan’s cost analysis leads him to conclude that:
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The study is titled “Railroad Cost Conditions — Implications for Policy” by John Bitzan of the Upper Great Plains Transportation Institute at North Dakota University. It was funded by the Federal Railroad Administration.
The study takes issue with a number of familiar concepts.
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- “End-to-end” rail mergers are “not beneficial” to shippers.
- “Parallel” mergers lower shipper costs.
- “The advantages of competition over monopoly are not as clear cut as the simple textbook illustrations show.”
- It may be more beneficial to address rate and service problems in the rail industry “through policies that strengthen regulatory oversight.”
